PHLX Gold/Silver Sector (XAU)

[long-gone]

To:Leman who wrote (128)
From: John Barendrecht Monday, Jun 23, 1997 6:09 PM
Respond to of 79911

Dow tumbles as Hashimoto comments trigger sell-off
By Richard Jacobsen

NEW YORK, June 23 (Reuter) - U.S. stocks ended sharply lower on Monday after comments from Japanese Prime Minister Ryutaro Hashimoto about the potential sale of U.S. government securities by Japan triggered a wave of profit-taking.

The Dow industrials finished off unofficially 192 points, or 2.5 percent, at 7604. It was the second-largest single-day point drop in Dow history, trailing only the 508-point Black Monday market crash of October 19, 1987.

Losing issues beat gainers by over two to one on active trading of about 496 million shares.

In a New York speech, Hashimoto said stable exchange rates were critical to Japan maintaining its holdings of U.S. government securities.

``I hope the U.S. will engage in efforts and in cooperation to maintain exchange stability so we will not succumb to the temptation to sell off Treasury bills and switch our funds to gold,'' Hashimoto said.

Market players said the comments added fuel to selling pressure already in the stock market following Friday's Dow run to a record closing high amid ``triple witching'' options and futures expirations.

``This is one of our vulnerabilities because the Japanese have been big buyers of our securities and obviously should that buying reverse itself, than that would not bode well for our market,'' said Jack Shaughnessy, director of research at Advest.

But he added that he thought Hashimoto was ``just posturing'' as part of the ongoing debate over the yen/dollar exchange rate.

Traders said the sell-off on Monday was likely exacerbated by Friday's triple-witching expiration, a quarterly event that often brings sharp market swings.

The downturn was most pronounced in the Dow stocks. The Nasdaq composite dropping 13 points, or 0.9 percent, to 1434.

Treasuries were also not hit as hard as the Dow. The 30-year bond was off 15/32 in late trading, its yield rising to 6.70 percent from Friday's close at 6.66 percent.

The Dow had risen 1,405 points from its 1997 closing low on April 11 through its close on Friday, a gain of 22 percent.

``The market was incredibly extended,'' said Roy Blumberg, chief investment strategist at Josephthal Lyon & Ross. He said he expected end-of-the-quarter buying by portfolio managers to keep the selloff from gathering steam.