New Fears Over Asia Put Chill on Wall St.; Dow Off 160; Bond Rates at Record Low
New fears about Asia's economic crisis sent shivers through Wall Street today as investors fled stocks on concerns that the woes overseas will erode corporate profits in the United States.</br></br>In one of the sharpest slides of the year, the Dow Jones industrial average fell 159.93 points, or 1.8 percent, to 8811.77, while the broader Standard & Poor's 500-stock index declined 17.70 points, or 1.6 percent, to 1094.58. At the same time, the price of 30-year Treasury bond rose, pushing the yield down from 5.70 late Wednesday to 5.65 percent, the lowest level since the government began regular sales of the long bond in 1977.</br></br>Analysts and money managers blamed Wall Street's skittishness on news that the Japanese yen had slipped to eight-year lows relative to the dollar, a sign that Asia's onetime economic dynamo may be far from emerging from its economic slump.</br></br>Some investors believe South Korea, China and other struggling nations will be forced devalue their own currencies to remain competitive when selling their products in the United States. That would put them at risk of defaulting on loans from Japan, hurt the market for U.S. products and erode corporate profits here, money managers said.</br></br>"It's all kind of a vicious cycle of impact," said Henry Herrmann, chief investment officer at Waddell & Reed Financial Services in Overland Park, Kan. "My heartburn has been going up." "There's a lot of concern that, basically, all of Southeast Asia could default on loans to Japanese banks," said Jeffrey Tyler, senior portfolio manager for American Century funds. "Japanese banks can't afford the strain."