Dow Recovers 23 as Dollar Steadies After Fed Steps In
A steadier dollar helped the stock market stage a mild rally Wednesday in an atmosphere of continuing caution as the end of 1987 approached.
The Dow Jones index of 30 industrials, down 72.78 points Monday and Tuesday, recovered 23.21 to 1,950.10.
With one session remaining in a year of wild swings, the Dow shows a net gain of 54.55 points, or 2.9%.
Advancing issues outnumbered decliners by more than 2 to 1 in Wednesday’s activity on the New York Stock Exchange. Big Board volume totaled 149.28 million shares, against 111.58 million in the previous session.
Stocks seemed to draw some strength from a steady showing by the dollar in foreign exchange.
The dollar was narrowly mixed against most other currencies Wednesday, but reports of intervention by the Federal Reserve and European central banks were encouraging, traders said.
“We can call that restrained optimism that the dollar will steady,” said Michael Metz of Oppenheimer & Co.
“We were happy with the dollar’s performance today, even though it took central bank support to prop it up. Firmness in the dollar brought in good early buying, especially from Europe,” said Jack Baker, head trader at Shearson Lehman Bros.
Wall Street investors brushed aside news of a 1.7% drop in the leading economic indicators for November, which was in line with expectations.
The decline in the key gauge of future economic activity, the steepest in 3 1/2 years, was blamed on the lower stock prices after the Oct. 19 crash that knocked the Dow down to 1,738.74 points.
The White House downplayed the leading indicators report by saying a single month’s figure could not be the basis for a judgment about the economy.
“Everyone knows the economy is slowing down,” said Alan Ackerman, a market analyst with Gruntal & Co. “But some people are talking about recession and others are just talking about a little slower economy.”
Analysts said most investors are waiting to see what direction the economy will take in the first quarter of 1988.
Otherwise, analysts said it was difficult to read much of significance into the market’s recent fluctuations, given strong seasonal influences on trading.
In the past couple of days, they said, it was apparent that some investors were still selling stocks for tax purposes or to ready their portfolios for year-end reports to clients.
On the other side of the coin, some traders have been buying lately in hopes that depressed issues might rally once those year-end pressures are lifted.
Morgan Gains
Gainers among the blue chips included International Business Machines, up 1 at 117; American Telephone & Telegraph, up 3/4 at 27 1/2; General Electric, up 7/8 at 45 1/8; Merck, up 3 at 158 7/8, and Coca-Cola, up 1 1/8 at 38 5/8.
J. P. Morgan, which was involved in developing a bond-swap plan to deal with Mexico’s debt problems, rose 1 1/2 to 36 5/8, and some other money-center bank issues also advanced.
But Manufacturers Hanover fell 1 3/8 to 22 1/8. The company said it would post a $23.5-million after-tax gain in the fourth quarter from the sale of stock in its Portuguese subsidiary.
