Monitor: Reaction to the plunge in the Dow Jones Industrial Average

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The Independent Culture
MOST SIGNIFICANT was investors' sudden recognition that earnings growth, the engine that powers stock prices, is deteriorating at even the biggest and best-known American companies. Combine this with an increasingly narrow stock-market advance - more stocks going down than up - and the outlook for stock prices turns decidedly bearish. Painful though any fall in stock prices can be, some money managers who had been quietly taking stock-market profits were unsurprised by the move. To them, such a drop was not a matter of if, but when.

New York Times

THERE IS unease over the Clinton investigation, fears that the deflationary pressures emanating from Asia could halt the US economy's growth, and concerns that corporate profits will fail to meet expectations. More legitimate concerns are that companies' earnings do not support the high prices of their shares, and that the financial crises in Asia would spread.

Herald Tribune

WALL STREET'S summer rally is turning into an early fall. Stock prices plummeted on Tuesday, marking the fifth consecutive day of declines that have erased half the year's gains. Fears about economic turmoil in Asia are driving stocks down, as are disappointing earnings reports from corporate America. One stock analyst said the market is falling because stocks have simply grown too expensive.

Chicago Sun-Times

THE MARKET should be worried about the Asia crisis, but not this worried. I don't think, in itself, it is a reason for this kind of aggressive selling. It reminds me of last fall, when the Asia problem expanded beyond Thailand. Asia will have an impact on some industries, but other sectors will remain mostly unaffected. I would call this a Swiss cheese economy; solid in places and gaps elsewhere. Admittedly, you have to watch out where Asia is going to hurt earnings. My short-term view is a probable rebound in many prices. In my experience, when you see big, broad declines like this, where there is not a fundamental problem, you get a recovery in prices.

GK Heebner, Boston Globe

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