Stocks Bounce Back From 2-Day Slump : Multinationals Benefit From Declining Dollar; Dow Gains 10.98
The stock market staged a rally Wednesday, bouncing back from the slump of the two previous sessions.
Analysts said stocks of multinational companies benefited from the declining dollar, which hit its lowest level since August, 1984, in foreign exchange.
The Dow Jones average of 30 industrials, which had fallen 12.54 points Monday and Tuesday, recovered 10.98 to 1,332.89.
Volume on the New York Stock Exchange stepped up to 108.81 million shares from 99.06 million Tuesday.
Analysts said recent declines of the dollar in foreign exchange trading have raised expectations of some revival in the manufacturing sector of the economy.
A lofty dollar has subjected many U.S. manufacturers to intensified competition from imports and at the same time made their goods relatively expensive in overseas markets.
A lower dollar also would stand to enhance the reported profits of American companies that do business in other countries.
Coke Advances
Among leading multinational issues, Coca-Cola rose 2 3/8 to 72 3/8, Merck rose 2 to 116, International Business Machines rose 1 3/4 to 123, Abbott Laboratories rose 2 5/8 to 59, Bristol-Myers rose 1 1/2 to 64 and Caterpillar Tractor rose 1 3/4 to 37 1/2.
Coca-Cola said it planned to revive the old formula for its flagship soft drink under the name Coca-Cola Classic while retaining the new formula for Coke announced last spring.
Caterpillar Tractor reported that its second-quarter earnings climbed to 51 cents a share from 25 cents in the comparable period a year ago and added that it expects the full year to be “moderately profitable.”
Additionally, brokers said there were hopes for signs of new progress toward an agreement on a government budget proposal designed to reduce the federal deficit. Conferees from the House and Senate who are trying to reach a compromise on a budget plan were reported to have settled with President Reagan on a “framework” for their negotiations.
ITT rose 1 to 31 3/4. The company said it expects to post an increase of more than 10% in its second-quarter earnings, excluding gains realized from divestiture of some of its operations.
Diamond Shamrock dropped 3/8 to 18. The company announced a four-part restructuring plan.
C. R. Bard, which raised its quarterly dividend from 11 cents to 14 cents a share gained 3/4 to 36 1/8.
In the bond market, prices mostly fell as traders awaited some sign of policy direction from the Federal Reserve.
The Federal Open Market Committee, the central bank’s policy-making board, has been meeting privately the past two days to chart a course on credit strategy.
While some analysts expect that the Fed may take steps to encourage lower interest rates to stimulate the economy, others say the Fed will hold a steady course because of fears that inflation would revive otherwise.
The federal funds rate, the interest on overnight loans between banks, traded at 7.563%, compared to 9.875% on Tuesday.
Secondary Market
In the secondary market for Treasury bonds, prices of short-term governments slipped 5/32 point, intermediate maturities were off 10/32 point and long-term issues lost 14/32 point, according to the investment firm of Salomon Bros.
In corporate trading, industrials fell point and utilities were off 5/8 point. Trading was light to moderate.
But among tax-exempt municipal bonds, general obligations rose point and revenue bonds were up 3/8 point. Trading also was light to moderate.
Yields on three-month Treasury bills, meanwhile, slipped 3 basis points to 6.90%. Six-month bills rose 6 basis points to 7.06%, and one-year bills were up 9 basis points at 7.15%. Yields on 30-year Treasury bonds rose to 10.32% from 10.28% late Tuesday.
