Dow Up 16.91 : Stocks Advance as Talks on Budget Cuts Continue
Wall Street stocks closed higher Wednesday after seesaw trading that reflected Washington’s hesitations over the final details of a package to pare the nation’s budget deficit.
After opening higher in line with foreign stock markets, stocks fell sharply on pessimistic remarks about lack of support from Republicans for the emerging agreement.
But investors later placed bets that a pact will be reached, and the Dow Jones industrial average climbed 16.91 points to close at 1,939.16.
Advancing issues outpaced declines by nearly 2 to 1 on the New York Stock Exchange.
Big Board volume totaled 158.27 million shares, against 148.25 million in the previous session.
“The psychology is definitely changing,” a trader remarked. “Yesterday people were saying no news is bad news. Today they are saying these politicians would have to be crazy to string us along this long and not come out with something very definitive.”
Larry Wachtel of Prudential-Bache Securities said the market has begun to focus on the prospect that a budget package will lead to more international cooperation to deal with the sluggish world economy.
Meanwhile, though, “the markets are paralyzed by these budget talks and want to see them over with already,” Wachtel added.
Budget negotiators ended Wednesday’s session without reaching a final agreement and planned to meet again today in hopes of completing an accord.
Some also noted technical factors that were buoying the New York market, including a positive influence from program trading, the computer-directed, rapid-fire stock buying that has been blamed for last month’s stock collapse. The rally also found support from traders when it held the psychologically important 1,900 level.
Gainers among the blue chips included Exxon, up 1 at 41 1/2; International Business Machines, up 5/8 at 118 3/8; General Electric, up 1/2 at 45 1/2; American Telephone & Telegraph, up 3/8 at 29, and Coca-Cola, up 1 at 39 1/8.
GTE led the active list, up 1 at 36 on turnover of more than 5 million shares. The company said it expects losses incurred by U.S. Sprint Communications, in which it has a stake, to continue to narrow.
Brockway Inc. dropped 5 7/8 to 47 1/8 on word that the Federal Trade Commission voted to oppose the planned acquisition of the company by Owens-Illinois.
Overseas, London’s Financial Times-Stock Exchange 100-share index rose 3.6 points to close at 1,663.7.
However, a lack of progress in U.S. budget-cutting talks sent the stock market seesawing in Tokyo after a surge this morning. The 225-share Nikkei stock average weakened after initially gaining more than 100 points in the first 20 minutes of trading, but bounced back to close the morning up 79.24 points to 22,813.73.
