Asia Turmoil Knocks 129 Off Dow; Yields Fall

Blue-chip stocks fell for the fourth consecutive day Thursday as investors fled to the safety of Treasury bonds amid fresh signs that Asia’s economic problems will reduce corporate America’s profits.

The dollar fell against European currencies but soared to a historic high against the South Korean won as the world’s 11th-biggest economy suffered another day of financial misery.

The Dow Jones industrial average fell 129.80 points to close at 7,848.99. Earlier in the day, the index of 30 blue-chip stocks had dropped more than 160 points, led by a decline in IBM.

For the third consecutive day, the technology-heavy Nasdaq market showed the steepest losses. Its composite index fell 38.07 points, or 2.3%, to close at 1,558.54.

Analysts said the sell-off has been prompted by the growing realization that Asia has accounted for much of the high-tech companies’ booming profit growth in recent years. With a dramatic reversal in Asia’s economic boom, companies are rethinking their business plans and warning investors to expect slimmer profits.

“It’s easy to just blame Asia,” said Brian Belski, technical analyst at Dain Bosworth in Minneapolis. “But the companies and the industries that have very heavy exposure there are in for some trouble.”

The financial market gloom Thursday started in South Korea, where the country’s currency, the won, continued to plunge. It has lost half its value this year.

The won fell to its 10% daily limit for the fourth day in a row, hitting a low of 1,720 to the dollar. The drop triggered big losses in South Korean stocks on concern that the record rescue package of $57 billion by the International Monetary Fund may not be enough to help the country.

The selling had a domino effect in other major Asian financial centers. Tokyo’s Nikkei index dropped 2.6% and Hong Kong’s Hang Seng index plunged 5.4%.

European markets also fell, but not as steeply. The Paris bourse fell 3.5%, Frankfurt’s DAX slid 2.1% and London’s FTSE-100 index fell 1.9%.

U.S. investors also absorbed fresh news that corporate earnings would suffer as a result of the financial upheaval in Asia.

“Investors have suddenly begun to focus back on the earnings issues coming out of Southeast Asia,” said Phil Orlando, chief investment officer of Value Line’s Asset Management division.

The sell-off in stocks, coupled with a government report of lower-than-expected November retail sales, sent investors flocking to the relatively safe haven of bonds.

Bond prices rose, with the yield on the benchmark 30-year U.S. Treasury bond falling to 5.99%, the lowest in 22 months. On Wednesday, the long bond yield closed at 6.07%.

“People are talking about the flight to quality again,” said Ken Fan, a government bond trader at Paribas Corp.

Analysts said two economic reports Thursday barely affected the market. Retail sales rose 0.2% in November, below expectations for the start of the holiday shopping season. Separately, the Labor Department said new applications for unemployment benefits fell by 13,000 to 311,000 last week.

“Ordinarily, either of those might have had an impact, but today it’s all Asia,” Belski said.

Declining issues outnumbered advancers by a 3-1 margin on the New York Stock Exchange in heavy trading.

The Standard & Poor’s 500-stock list fell 14.85 points to 954.94 and the NYSE composite index fell 7.28 points to 500.42.

Some analysts said they expect the high-tech sell-off to continue.

Among Thursday’s highlights:

* Companies that paid the price for their Asian exposure included semiconductor equipment firms Applied Materials, down $4.44 to $27.31;d Kulicke & Soffa Industries, down $6.75 to 18.13; and Quantum, down $3.88 to $19.94.

All three companies continued a weeklong refrain of technology companies announcing altered plans and lower-than-expected earnings due to weakness in Asia.

Even the industry giants weren’t immune. After receiving a downgrade from Merrill Lynch analyst Steve Milunovich, IBM became the Dow’s biggest loser, dropping $4.88, or 5%, to $101.63. Microsoft fell $3.19 to $139.06 and Intel dropped $2.88 to $71.81.

* The technology sector wasn’t alone; banks and other multinational companies indicated their concerns about Asia earlier in the week.

BankAmerica led a long list of fallen banking stocks, as it dipped $3.75 to $74.75. Citicorp fell $3.75 to $128.25. Analysts said selling of bank stocks was most likely prompted by J.P. Morgan’s announcement this week that its earnings would be held down by “unsettled market conditions globally.” J.P. Morgan fell $1.88 to $116.

In currency markets, the dollar fell to 1.76 German marks in New York from 1.7870 on Wednesday, and to 1.4245 Swiss francs from 1.4470. But it rose against the Japanese yen on concerns about a planned bailout package to stabilize Japan’s financial system. The dollar fetched 129.75 yen, down from its session high of 130.18 but up from 129.28 on Wednesday.

Elsewhere, gold for February delivery fell $2.60 to close at $284 an ounce on New York’s Commodity Exchange. January crude oil edged up 1 cent to $18.15 a barrel at the New York Mercantile Exchange.