Originally created 08/15/98

Dow down 9.8 percent since July



NEW YORK -- A huge gain by J.P. Morgan cushioned the Dow for now, but the monthlong slide from record highs reached 10 percent on Friday for the stock market's other well-known barometer, the S&P 500.

An early rally fizzled for the second straight day, with the Dow Jones industrial average surrendering a 97-point gain before finishing with a loss of 34.50 at 8,425.00, down 173.02 for the week.

It was the lowest close since late February for the Dow, which now sits about 913 points, or 9.8 percent, below the July 17 record of 9,337.97.

But while the equivalent of a 38-point gain by J.P. Morgan helped avert the Dow's first 10 percent "correction" since last October's selloff, the Standard & Poor's 500-stock list fell 12.16 to 1,062.75 on Friday, finishing the week 10.4 percent below its mid-July peak.

J.P. Morgan rose 9 to 126 after Business Week reported that the Wall Street firm is discussing a merger with a major European bank.

Before a late pullback, Morgan's shares actually rose as much as 18 points, or the equivalent of 72 points on the Dow, which in just one month has seen this year's gain shrink from 18.1 percent to 6.5 percent.

Friday's downturn came despite big rebounds in Hong Kong and Moscow stock exchanges after several days of steep declines spurred by the deepening economic crises in Asia and Russia. The selloffs in those markets had served as key sparks in the Dow's 258-point plunge during Tuesday's session.

"What we have is a very weak market internally," said Steven Goldman, market strategist, Weeden & Co., in Greenwich, Conn.

"Russia was up 15 percent and Hong Kong was up 8.5 percent. What happened? How come we didn't rally?," said Goldman, noting that the market drew little comfort from a new all-time low of 5.54 percent for the yield on the 30-year Treasury bond, a key influence on borrowing rates. "We are not going to have any sustained rally in the next several months. We can't even have a sustained rebound."

The technology-heavy Nasdaq composite index fell 12.35 to 1,790.19. Tellabs fell 13 11/16 to 58Å and merger partner Ciena fell 17 1/16 to 54Å as the two most active Nasdaq issues after Ciena issued a profit warning.

Declining issues outnumbered advancers by a 5-to-4 margin on the New York Stock Exchange, where composite volume totaled 765.20 million shares, down from 782.51 million on Thursday.

The NYSE composite index fell 5.35 to 535.71, and the American Stock Exchange composite index fell 5.14 to 662.64.

The Russell 2000 index of smaller companies fell 1.04 to 402.79.

Hong Kong's main stock index soared 8.5 percent after the government made a rare intervention to prop up the market, which had plunged 16 percent to a five-year low in the first two weeks of August.

Russian share prices soared 15 percent as President Boris Yeltsin called on Parliament to hold an emergency session to address the economic panic taking hold in the markets there.

In other overseas trading, Tokyo's Nikkei stock average fell 1.7 percent, Frankfurt's DAX index rose 1.8 percent and London's FT-SE 100 rose 1.0 percent.