Across the Nation

Wild day on Wall Street ends routinely

NEW YORK - Frank Lai woke up praying that his nest of Nasdaq stocks would be stable enough yesterday 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 loaned 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.

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.

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 Nasdaq finished down 74.79 at 4,148.89 and the Dow ended the day down 57.09 at 11,164.84.

"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.

"This is a gut check," said Randall Roth of Renaissance Capital Management, which took a big hit on a major portfolio that invests in initial public offerings.

"This is when you have to fall back and say, I believe in this company because they're solid - not because Wall Street likes them. Suddenly, you have to be a fundamental investor."

The Nasdaq and the Dow both recorded their widest point swings in history on record volume. The Nasdaq finished down 74.79 at 4,148.89 and the Dow ended the day down 57.09 at 11,164.84.

The rebound came too late for others who had jumped out of the game too soon or were still holding unrevived sweethearts.

Throughout the day, brokerage firms nationwide scrambled to rake in all the money they had loaned people to buy stocks. Datek Online Holdings, for example, made thousands of these dreaded margin calls - putting the day in the top five in terms of calling in loans, despite aggressive curbs recently on loans for volatile stocks.

"We had unfortunately to close a number of accounts down today," said spokesman Mike Dunn. "We had no choice. It was a very very difficult day."

The Nasdaq's slide began on Monday, when investors started selling off Microsoft Corp. shares, correctly anticipating a federal judge's ruling that the software giant had violated antitrust laws. Microsoft, Cisco Systems Inc., Intel Corp., Sun Microsystems Inc. and Oracle Corp. - bellwether stocks - account for about a third of the Nasdaq. Monday's sell-off pulled down the Nasdaq 7.6 percent - its fifth-worst day ever.

Yesterday morning, Andrew Brooks, the chief equities trader at the huge mutual fund T. Rowe Price, checked the futures index. That was moving up, indicating optimism in the markets. Today would be better, he told himself.

"I thought we'd do a little bouncing," he said. But, just in case, he tucked under his arm a yellowing copy of John F. Kennedy's "Profiles in Courage."

"It got real ugly," said Tom Schrader, senior vice president of Institutional Equity Trading at Legg Mason in Baltimore. "Everybody was selling anything they could."

At a midday conference call with investors, Schrader urged them to hold on to high-quality stocks.

By about 3 p.m. the mood shifted. A trader yelled to Schrader: "I told my kids earlier today I couldn't send them to college, now I can send them anywhere they want to go."

"There were terrific bargains floating around out there, if you had the stomach to step in," Brooks said. "It just took some courage."

Marshall Acuff, chief investment strategist at Salomon Smith Barney Inc., said that the sell-off was an extension of the "convergence of the old economy and new economy" that has been reshuffling money since March 10, when the Nasdaq hit its peak. Then, it was up 24 percent since the beginning of the year. Now it is up just 2 percent for the year.

"It's rebalancing itself internally," he said. "It is working off high valuations in some stocks in the new economy and taking advantage of more reasonable opportunities in the old economy."

It seemed that everyone - institutions, individual investors, day traders, pension funds, hedge funds, dot-com employees and insiders - was selling technology stocks and putting the money into safer, more value-oriented stocks, said Hugh A. Johnson, chief investment officer at First Albany Corp.

House blocks effort to affect transplants

WASHINGTON - Taking on an issue that means life or death to transplant patients, the House voted yesterday to block a Clinton administration effort to move more hearts, livers and kidneys to those who are closest to death.

The legislation would strip the Department of Health and Human Services of its power to set transplant policy and comes after years of tension between HHS and the United Network for Organ Sharing, the private firm that has long run the transplant system under a government contract.

The House approved the measure, 275-147, shy of the 290 votes needed to override a promised presidential veto.

By voice vote, it agreed to include an amendment that overtly kills HHS regulations already in place that direct more organs to the sickest patients - even if they live far from the donor.

The legislation also encourages organ donation, something all sides support.

It calls for financial assistance for living donors who give away a kidney or part of a liver, and offers grants for states to encourage donation.

The Senate has not yet acted on the issue, and both sides were hoping for a resolution there. Sens. Bill Frist (R-Tenn.) and Edward Kennedy (D-Mass.) had planned to introduce compromise legislation today that would give an expert commission power to mediate disputes. But the pair had not yet reached agreement, and Frist prepared to introduce the legislation on his own.

The basic problem is supply and demand. Only about half of families asked to donate organs say yes, and many families are never asked. Mwhile, nearly 5,000 people die each year aitwing for organ transplants, and 68,530 people are waiting for transplants today.

The legislation would give the transplant network total control over the rules governing how to distribute more than 20,000 organs that are donated each year. Under the network's system, patients who live in the same area as donors have first chance at organs, even if a sicker patient lives just outside the border. The Clinton administration wants to eliminate those geographic barriers, saying someone's chance at life should not be dictated by where they live.

''Healthy people are getting organs before they need them and the very sick are not getting organs before they die,'' said Rep. John Dingell (D-Mich).

The transplant network and many transplant centers - particularly smaller hospitals - fear that change will siphon away locally donated organs to other centers, jeopardizing their programs. They also argue that HHS has no right to write the rules, calling its effort to direct policy a ''power grab.''

''Is this bureaucracy up here equipped to make these decisions?'' asked Rep. Michael Bilirakis (R-Fla.) the bill's chief sponsor. ''Do we want politics determining life and death matters? I think not.''

Supporters of the current system also argue that states would have little incentive to encourage organ donation if the organs were being shipped to other states.

''If the fruits of your labor are going to be sent to another part of this country, that increases the chances that you won't work as hard,'' said Democratic Rep. Thomas Barrett of Wisconsin, where donation rates are high and the state has sued HHS to stop the new transplant regulations.

Congress has intervened in this emotional battle before, keeping the HHS regulations on hold for nearly two years.

In the meantime, Congress ordered the Institute of Medicine to study the system. In its report, the institute recommended that HHS assert more oversight over the transplant system. It also backed up the core of the HHS regulation, recommending that the geographic barriers be broken down.

Opponents of the legislation repeatedly cited that report as they argued that Congress should not strip the HHS of its authority.

''It turns those decisions over to a private bureaucratic organization, which in the end has no real accountability to taxpayers,'' said Rep. Sherrod Brown (D-Ohio).

The Justice Department has said giving control over legally enforceable policy to a private group may be unconstitutional.

Opponents also object to provisions that limit the amount of data about hospital performance that must be made public and make it difficult for the HHS to choose an alternate contractor to run the system.

The HHS regulations took effect last month, and the transplant network is now working on a new policy for distribution of livers, which have engendered the greatest controversy.

Meanwhile, the House declined to nullify state laws passed in Louisiana, Texas and Wisconsin that bar donated organs from crossing state borders unless there are no medical matches inside the state.

The transplant world has been consumed by the intense argument over distribution policy for two years.

Shalala said she hopes the Senate will find a compromise. The House vote, she predicted, will ultimately be seen as ''an unfortunate footnote to larger good-faith efforts that are under way to achieve the best organ transplant system possible.''

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On the Net: United Network for Organ Sharing: http://www.unos.org

HHS Division of Transplantation: http://www.hrsa.gov/osp/dot/

Abortion ban under high court's scrutiny

BELLEVUE, Neb. - On April 25, the U.S. Supreme Court will hear Dr. Leroy Carhart's challenge to Nebraska's ban on a procedure that opponents call "partial-birth abortion." The case will be the high court's first major decision on abortion in eight years.

Carhart, one of only three doctors in Nebraska known to perform abortions, maintains the ban is written in such a way that it could be used to outlaw all abortions.

"I'm willing to do this. It has to be done," Carhart said. "But I never conceived in the foggiest that I'd get involved in something this controversial."

or that this, in fact, would ever become this controversial."

People on both sides of the issue agree that the decision in Carhart's case could safeguard or significantly erode abortion rights in the United States.

Similar laws against partial-birth abortion are on the books in 30 states, but courts have blocked enforcement of most of them. President Clinton has twice vetoed a federal ban enacted by Congress.

The high court took the case because of conflicting decisions by federal appeals courts. One court struck down the Nebraska law along with measures in Iowa and Arkansas, saying the law was vague and too broad. Another court upheld nearly identical laws in Illinois and Wisconsin.

Nebraska Attorney General Don Stenberg, who will defend the law in front of the high court and is using the case as the cornerstone of his U.S. Senate campaign, argues the ban is limited to a procedure doctors call D&X, or dilation and extraction, which involves cutting the skull of a fetus and draining its contents before extraction.

"It shocks the conscience that in the United States of America, a human child can be literally pulled from the womb and cruelly killed by having his or her skull punctured and brain suctioned out," Stenberg said.

For Carhart, the dispute is personal. In 1991, his family's rural home and belongings burned in a fire apparently started by an abortion foe. The family dog and cat were killed, as were 17 horses trapped in a barn.

"The next day, we received an anonymous letter postmarked the day of the fire saying that the killing of the horses was justified to try to make a statement against the killing of the babies," Carhart said.

County workers bulldozed the rubble and destroyed any evidence before arson investigators arrived. No one was arrested.

Carhart spoke publicly about the fire for the first time Feb. 8 while addressing the Center for Reproductive Law and Policy in Washington.

"To prevent this from being even a minute victory for the anti-choice zealots, my family and I decided to make the practice of abortion, the training of physicians to become abortion providers and the increasing the availability of safe and legal abortions ... my goal for the remainder of my professional life," he said.

Nowadays, Carhart varies his daily routine as a safety precaution. Most mornings, protesters protesters taunt Carhart, his staff and patients as they enter the clinic, where he also has a general medical practice. Demonstrators scream, "Baby killer!" at him almost daily.

The clinic is not a conspicuous target: Carhart works in a nondescript two-story building behind a gas station in a working-class neighborhood of this Omaha suburb surrounding Offutt Air Force Base. There is no sign on the clinic. The glass on the front door is painted brown.

His patients - some of whom drive hundreds of miles to see him - park in a patched, asphalt parking lot and trudge up wide, wooden stairs that wrap around the back of the building. Two pots near the entrance are jammed with cigarette butts. The chairs in the waiting room are dingy.

Carhart, a New Jersey native was stationed at Offutt before he retired as a lieutenant colonel in 1985 and opened a practice, is the only doctor in Nebraska known to perform abortions after the 16th week of pregnancy.

He performs more than 1,200 abortions a year, of which he says about 20 involve the D&X procedure. The procedure is estimated to be used in one out of 1,800 abortions performed nationwide, yet it has become the rallying point of anti-abortion groups.

The procedure is used most often in cases where the woman has developed heart disease, diabetes or other life-threatening ailments.

Carhart said the method is one of the safest abortion procedures because it reduces the risk of leaving parts of the fetus inside the woman.

Abortion opponents accuse Carhart of caring only about money.

"He challenged our partial-birth abortion ban because he admitted it would inhibit his practice," said Julie Schmit-Albin, executive director of Nebraska Right to Life.

Carhart said he fears he may someday be ordered to stop performing abortions altogether.

"I think we're going to lose this issue eventually - at some point in time, abortion will become illegal in the United States," he said. "The population seems to be willing to listen to a very arrogant and vocal minority."