Scoop Link: A Wild Ride on Wall Street
By Ianthe Jeanne Dugan
Washington Post Staff Writer
Wednesday, April 5, 2000
NEW YORK, April 4 –– Frank Lai woke up praying that his nest of Nasdaq stocks would be stable enough today that he could rip himself away from the computer at his Las Vegas home and get back to his day job--running four Mrs. Fields Cookies stores.
But after ticking upward briefly at the opening of trading, the Nasdaq composite index began to slide. Lai sat glued to his machine, selling stocks to stave off brokers who had lent him money and picking up bargains on others. "This is the scariest day ever," he said, laughing nervously as his half-million dollar portfolio melted off 20 percent of the value it had when the week began.
The market recovered in the afternoon, but around lunchtime, many investors such as Lai lived the nightmare they had been fearing for weeks, as the Nasdaq and Dow Jones industrial average plunged in an apparent free fall, dropping hundreds of points in a matter of minutes.
The Nasdaq's drop began to pick up momentum shortly after noon and suddenly, the blue-chip Dow--which had been drifting all morning--started to follow it down. Between 12:30 and 1:15 Eastern time, both indexes just collapsed in a convulsion of selling. At their lows, both were down more than 550 points. For the Nasdaq, that was a huge move--down 13.6 percent, its biggest one-day drop ever.
"The bubble has burst," declared Mary Farrell, a leading market strategist at PaineWebber Inc., which has been running full-page ads in major newspapers warning of a bubble in what it called "new new economy stocks."
But, just as suddenly as they had plunged, the barometers snapped back. Buying started in the blue-chip shares and investors started bargain-hunting.
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