Reverse spin / The week in Review

The big news, of course is the Dow Jones Industrial Average’s breaching the 10,000 barrier on the downside and closing Friday at a painful 9862, down 14.2% for the year.

The gloom-and-doom brigade was out in full cry, of course, even though the Nasdaq Composite hit record high after record high, closing above 4600 before slipping to 4590 on Friday.

“Lots of things are falling into place to make it look like the end of a traditional stock market/economic cycle,” chicken-littled Hugh Johnson, chief investment officer at First Albany Corp.

“Once the Dow got to 10,000 it probably spooked some people,” said Harvey Hirshorn, Stein Roe & Farnham’s chief economist.

Financial and retail stocks slid like Maury Wills stealing second as Federal Reserve Board Chairman Alan Greenspan kept up his verbal assault on interest rate levels, which he seems to think are low.

Another yellow light came from the National Association for Business Economics, which predicted that the gross domestic product would slip below 4% for the first time in four years. Nevertheless, Diane Swonk, the group’s president (her day job is chief economist at Bank One in Chicago), says the good times could roll until 2004.

Still, she says, Alan the Inscrutable has hammered himself firmly into a permanent job: “In the past, the panel believed that the economy would eventually slow on its own, with little intervention from the Fed. Today, the panel believes that the Fed will need to tighten to get the economy to slow measurably.”

Tom.com bomb

Internet mania hit Hong Kong like the American flu, with at least 30,000 would-be investors blocking main streets in an effort to put the money on an Chinese-language web portal called tom.com. At the hardest-hit HSBC Bank branch in Kowloon, lines stretched for a half-mile. Tom.com is expected to be 2,000 times oversubscribed when the stock goes on sale Wednesday. The company is controlled by two of the bluest blue chips, Cheung Kong (Holdings) and Hutchison Whampoa.

The web disease has also stuck Britain, where a gaggle of Internet investment funds are competing for the public’s pounds. The latest is called Internet Incubator, with 12 million quid ($20 million), and is looking at three dozen start-ups across Europe. Another, called JellyWorks, saw its stock rocket 2000% within three days of its IPO.

Day by day

A Miami day-trading house agreed to settle Securities and Exchange Commission charges of violating margin lending rules, while one in Montvale, N.J., is calling similar charges “groundless and baseless.” Investment Street Co., its back-office provider and two officials agreed to pay a total of $30,500 in fines, without admitting or denying anything. Combative execs at the Garden State’s All-Tech Direct Inc., on the other hand, say they intend to fight all the way. It’s the SEC’s first enforcement move since heavily leveraged Mark Barton killed nine people at two day-trading offices in Atlanta, one of them operated by All-Tech.

Front, please

Marriott International Inc. and sister company Host Marriott Corp. agreed to buy two partnerships for $372 million to settle lawsuits from investors charging that the hotel chain nailed them both going and coming in selling them hotel partnerships and then managing the properties, which cover 120 Courtyard by Marriott hotels. The deals were cut in the ’80s, before Marriott Corp. split itself in two. The deal is far from final, though, since neither the partners nor the court has approved it. That’s a lot of luggage without a bellman.