A CHILLING DAY ON WALL STREET : Crash Haunts Wall St. During Latest Drop

NEW YORK —  In their offices with the panoramic views high above the stock-trading floors, the chieftains of Wall Street were circumspect about Friday’s rapacious stock market rout.

“Wall Street is prepared for violent swings in the market,” said Jeffrey B. Lane, the president of Shearson Lehman Bros. “You might get a little nervous about a day like today, but there’s no shock.”

Tell that to the men and women on the trading floor.

“Visions of Oct. 19 came back to mind, and everyone just wanted out,” said Steve Chronowitz, director of futures research at Smith Barney, Harris Upham & Co.

“When are we going to learn that these markets have to be reformed?” demanded an agitated Michael Metz, a market strategist at the New York investment firm of Oppenheimer & Co., who saw shades of October in Friday’s late afternoon selloff that sent the Dow Jones industrial index plunging more than 100 points in the last two hours of trading to close down 140.58 points.

“The program traders just besieged this market late in the day, and with so many people taking the day off because they were snowed in (by the winter storm that rocked the Northeast on Friday), there was the same kind of (buying) demand vacuum we had in October,” Metz said.

‘Not Panicking’

Realistically, Friday’s broad-based market plunge bore few similarities to October’s legendary crash, and virtually no one is predicting another collapse of the magnitude of Oct. 19--when the Dow plummeted a record 508 points.

Missing Friday were the avalanche of trading orders and the unbridled panic that overtook the financial markets in October. Only 197.30 million shares changed hands Friday on the New York Stock Exchange, a far cry from the 338.48 million shares traded Oct. 16--when the Dow fell a then unprecedented 108.36 points--and the 604.33 million shares that overwhelmed the exchange on Oct. 19.

“People were reacting to reality this time, not panicking,” said Samson Wang, chief investment officer at Beacon Capital Management in New York.

“There are some genuine concerns about the economy, and there was even more evidence Friday that the underlying fundamentals are quite worrisome,” he said, refering to an employment report released Friday that heightened inflationary concerns and to indications that next Friday’s trade deficit report will bear even more bad news.

Nevertheless, investors are still so skittish three months after the historic crash that they are unabashedly following the lead of Wall Street’s program trading professionals more than ever before--and that game of follow-the-leader has struck fear into some on Wall Street.

“Yes, it’s healthy that there was some news we could trace the selloff to,” said one bearish Wall Street economist who asked not to be named because his firm has taken a bullish position. “But I have to tell you, my heart was pounding when those programs kicked in and, in a matter of minutes, the snowball effect began.”

Oppenheimer’s Metz blames at least two-thirds of the points given up Friday by the Dow on program trading--those computerized trades whose presence has barely been felt in the markets since October, when they were sharply criticized for causing the 108.35-point nose dive of the Dow on Oct. 16 and helping to precipitate the crash the following Monday.

“Investors didn’t panic in the least; it was just the program trades kicking in,” said Robert N. Gordon, president of Twenty-First Securities in New York of Friday’s trading. “But I’m afraid another 100-point down day--regardless of the reasons--is going to aggravate an already festering wound.”

Beacon Capital’s Wang--while not predicting another crash--said he wasn’t surprised by Friday’s performance and “is worried” about Monday. “If you put 100 people in the same room, you would get 50 optimists and 50 saying we’re in for more declines,” he said. “We’re seeing a classic tug of war between the bulls and bears, and that almost always means we’re in for a period of volatility.”

Not wanting to be red-faced on Monday morning, several big Wall Street firms have decided not to respond immediately to the latest decline through their advertising.

After all, said Catherine Kaputa, director of advertising at Shearson Lehman Bros., “these swings of 100 points and more have been happening lately. The market could go up on Monday and then we’d look silly.” A few days after the October crash, Shearson responded with simple ads to reassure investors that most of its offices would be open late and on weekends. If the market continues to drop, however, “we’ll probably do something next week,” Kaputa said.

Staff writer Bruce Horovitz, in Los Angeles, contributed to this story.

BIGGEST DAILY POINT LOSSES FOR DOW INDUSTRIALS The Dow Jones industrial average had its third worst point drop Friday. In terms of points lost, here are the 10 worst days for the average, including the percentage change in value.

Oct. 19, 1987 508.00 to 1,738.74, 22.6%

Oct. 26, 1987 156.83 to 1,793.93, 8.04%

Jan. 8, 1988 140.58 to 1,911.31, 6.9%

Oct. 16, 1987 108.35 to 2,246.74, 4.6%

Oct. 14, 1987 95.46 to 2,412.70, 3.8%

Oct. 6, 1987 91.55 to 2,548.63, 3.5%

Sept. 11, 1986 86.61 to 1,792.89, 4.6%

Oct. 22, 1987 77.42 to 1,950.43, 3.8%

Nov. 30, 1987 76.93 to 1,833.55, 4.0%

Dec. 3, 1987 72.44 to 1,776.53, 3.9%

HOW THE DOW STOCKS PERFORMED

The 30 stocks in the Dow Jones industrial average and how they fared Friday as the overall Dow average fell 140.58 points.

Close Point Stock Friday Drop Percent Change Alcoa 43 7/8 -3 3/8 -7.14 Allied Signal 28 3/4 -2 3/8 -7.63 American Express 23 3/4 -2 1/8 -8.95 AT&T; 27 3/4 -1 5/8 -5.53 Bethlehem Steel 15 1/2 -2 -12.68 Boeing 39 -2 5/8 -6.27 Chevron 41 -2 3/4 -6.25 Coca-Cola 36 5/8 -3 3/8 -8.44 Du Pont 82 -5 7/8 -6.67 Eastman Kodak 47 1/2 -4 7/8 -9.31 Exxon 38 -3 -7.88 General Electric 43 -4 -8.47 General Motors 61 7/8 -4 -6.43 Goodyear 57 1/8 -4 1/8 -6.73 IBM 115 -8 1/2 -6.88 International Paper 38 7/8 -4 3/4 -10.89 McDonald’s 42 3/8 -3 5/8 -7.88 Merck 156 1/8 -10 3/8 -6.23 Minnesota Mining 59 3/8 -6 1/2 -9.87 Navistar 4 - -5.56 Philip Morris 85 -3 7/8 -4.36 Primerica 25 -1 1/2 -5.61 Procter & Gamble 82 -5 1/8 -5.87 Sears, Roebuck 32 -2 3/4 -7.86 Texaco 38 1/2 - 1/2 -1.28 USX 30 7/8 -2 7/8 -8.52 Union Carbide 22 3/4 -1 5/8 -6.67 United Technologies 34 5/8 -1 5/8 -4.48 Westinghouse 51 --2 7/8 -5.34 Woolworth 36 1/8 -2 3/8 -6.17

Source: Associated Press