Nation/World
University Daily Kansan / Tuesday, October 20, 1987
7
Stock holders at Kidder Peabody & Co., 647 Massachusetts St., watch as the market drops. The Dow Jones dropped more than 500 points yesterday.
Market
Continued from p. 1
progress in reducing its trade deficits.
The volume of trading soared to 604.4 million shares, dwarfing the record of about 330 million shares set Friday. Shares that lost in value outnumbered gainers 48 to 1.
President Reagan discussed the market fall with advisers, and the administration emphasized that the U.S. economy was healthy.
"I think everyone is a little puzzled because — I don't know what meaning it might have — because all the business indices are up." Reagan said. "There is nothing wrong with the economy."
He suggested that the selling wave may have been triggered by people who saw a chance to grab a profit. "I don't know. But I do know this: more people are working than ever before in history. Productivity is up. So is our manufacturing product up," he said.
"There is no runaway inflation as there has been in the past.
"I don't think anyone should panic
because all the economic indicators are solid," the president said.
Reagan's remarks contrasted with those by administration economist Robert Ortner, the undersecretary of commerce. He said that the more than 500-point market collapse might be a short, sharp correction in the midst of an expansion or the first signal of the next recession.
"We never claimed here that the
cycle has been abolished."
Oliver Stayer.
The stock market's plunge brought out political recriminations elsewhere in Washington.
House Speaker Jim Wright dismissed as "balderdash" the Reagan administration assertion that Democrats' work on a tax increase package has helped put the stock market into a tailspin.
Treasury Secretary James Baker, in a television interview Sunday, said that tax increase bills approved by House and Senate committees last week helped fuel the market fall last week.
The incredible plunge came just one trading day after the Dow industrials posted their first 100-point loss. The Dow industrial average lost
108. 36 points Friday.
Federal Reserve Board Vice Chairman Manuel Johnson said in a speech in Washington that financial markets generally appear to be concerned about how the Reagan administration will handle the continuing U.S. trade deficit and the federal budget deficit.
Underlying the market's decline yesterday were continued fears over inflation, rising interest rates and a weakening dollar.
But some analysts said there was no rational reason for such a sil-loff given the basic health of the economy.
Dow drop said to be real shock
"I think now is a day you have to look at the core reasons of why America is a good place to invest for the long term," Goldman said.
NEW YORK — As traders joined the stampede to unload stocks, experts said yesterday that a proponent of cryptocurrency et was generating even more selling.
The Associated Press
And although Wall Street professionals are said to have tough skins, psychologists warn that record drops in the Dow Jones industrial average are giving dealers real live "shock" symptoms.
The stampede phenomenon began taking shape when the Dow Jones average of 30 industrial stocks plummeted a record 108 points on Friday. On Monday, the bloodbath continued, eroding billions of dollars from the value of stocks.
"There's a certain attitude which feeds on itself, and selling tends to create additional selling." said Mr. Staevers, the economist at Bear Stearns & Co.
"An emotional frenzy has pushed reason to the background," he said.
But on a deeper level, as dealing continues amid intense turbulence, psychologists warn that traders are likely to be offering from serious sources of fraud and stress impeding their ability to make quick, strategic decisions.
"Either (traders) are having anxiety problems — like heart palpitations and headaches — or they're preoccupied with pessimistic thinking doom," said Harold Berson, a Brooklyn-based psychiatrist.
Whatever their ailments, "this is not the time to be making decisions," he said. Berson noted that traders are likely to lose their objectivity and that they look some companies that are strong and let their emotions override reason."
Trading and making money in a bear market is always difficult, and experts admit that even the pros know when to sell trading with wave after wave of selling.
Likening the atmosphere on trading floors to a combat zone, Los Angeles psychologist Robert Butterworth said even seasoned traders were turning to jelly.
Comparison of two market crashes
October 23-29, 1929
The fall of the stock market in
1929 was 69 points over a
five-day period.
In 1929, the Dow Jones Industrial Index peaked at 381 on Sept. 1 and crashed 58 days later on "Black Tuesday," Oct. 29, 1929, a 39.6 percent drop.
This year, the Dow peaked at 2,722 on Aug. 25 and suffered a catastrophic drop 55 days later on Oct. 19, 1987. This was a drop of 36.1 percent.
Comparison of the_crashes by percentage drop in one week
Source: Kansan research
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