The stock market Wednesday pulled out of its downward spiral, turning solidly higher as investors--encouraged by a stronger dollar, higher bond prices and some positive earnings reports--came looking for bargains.
The Dow Jones index of 30 industrial stocks, which had lost 119.18 points in the previous four sessions, closed at 2,282.95, up 29.97. Gainers outnumbered losers by more than two to one among issues listed on the New York Stock Exchange, with 1,120 higher, 522 lower and 333 unchanged.
NYSE volume totaled 198.15 million shares, compared to Tuesday's 266.54 million, the second-highest in history.
Meanwhile, the dollar rose against most key currencies, helped by market fears of forceful central bank intervention and dealer reluctance to take speculative positions in dollars over the Easter holiday.
Plans to Support Dollar
The dollar had hit a new low against the Japanese yen Tuesday and was considered undervalued. Some dealers traced the currency's rise Wednesday to remarks by Satoshi Sumita, governor of the Bank of Japan, who said in Tokyo that the major industrialized nations were making concrete preparations to support the currency.
In Tokyo, the dollar closed at 141.85 yen, up from the record closing low of 141.35 yen it hit on Tuesday. Later in London, the dollar traded at 142.15 yen. By the time trading ended in New York, the dollar was quoted at 141.75 yen, up from 140.75 yen quoted late Tuesday.
Gold prices advanced in Europe but fell back in U.S. trading. Gold rose in London to a late bid of $443.75 an ounce, compared to late Tuesday's $441.50. In Zurich, gold rose to $445 from $442.50. Earlier, in Hong Kong, gold rose $3.38 to close at $442.77.
On the Commodity Exchange in New York, gold fell $7.80 to $443.10.
The stock market's advance, analysts said, was a natural rebound after its recent slide. "We still have a lot of people who believe this is still a roaring bull market going to 3,000 (on the Dow), so any setback is a bargain as well," said Michael Metz, an analyst with Oppenheimer & Co.
"The market had been having a normal correction over the last week and a half, which is not unexpectable considering that it had risen 24% since Jan. 1, with essentially no correction," said Mary Farrell, a Paine Webber analyst. "What we see now is a . . . short-term reaction."
The dollar's problems, the swelling trade deficit, rising interest rates, worries over escalating trade tensions and fears of resurgent inflation had undermined the market's confidence recently, sending prices lower. Thus, analysts said, the market took heart Wednesday, when the dollar strengthened and bond prices rose.
Despite the gain in bond prices, they lost some ground to profit taking late in the day. While government issues traded substantially higher in London and Tokyo early in the day, they settled back down later in New York.
In late trading, the key 30-year Treasury bond was up 26/32 point, or about $8 per $1,000 in face value. That lowered its yield to 8.30% from 8.39% late Tuesday.
Analysts cautioned that the rebound in bond prices might be temporary. "It's going to take a period of time at the very best to calm these markets down," said William Brachfeld of Daiwa Securities America.
On the New York Stock Exchange, American Telephone & Telegraph led the most-active list Wednesday and closed at 24 3/4, up 3/4. The company was among several that reported improved earnings during the day.