WALL STREET: Institutionalized Panic

Panic is an emotion that on Wall Street has long been attributed to the small individual investor. Last week the "institutional" investors—managers of mutual funds, pension funds, insurance companies, bank trust departments—who now dominate trading, showed that they are subject to it also. Their panicky unloading of Combustion Engineering, Inc. stock led to an astonishing price break.

Combustion Engineering, a Stamford, Conn.−based maker primarily of steam-generating equipment, over the previous 16 months had announced a series of major contracts that had driven its stock up to a January high of 106 ¼...