The stock market rebounded Tuesday from a steep two-day slide, but equities analysts said the advance was tempered by worries that U.S. interest rates would move higher and by concern over today’s release of the potentially market-jolting monthly trade report.
The Dow Jones industrial index, which lost nearly 50 points in the past two sessions, gained 12.09 to close at 2,077.17, snapping a four-session losing streak. Brokers said buying was largely limited to the components of the Dow industrial index. Most broader market barometers nudged higher.
The Commerce Department is to report the September merchandise trade balance this morning. The market is expecting a shortfall of $9 billion to $11 billion. If the deficit number substantially exceeds that amount, some fear it could trigger a selloff in the dollar, stock and bond markets.
“Everybody’s just waiting to see what those numbers are going to do,” said Edward P. Nicoski, a technical analyst at Piper Jaffray & Hopwood Inc., a Minneapolis-based investment firm.
Although the huge trade deficits racked up by the United States can vary widely from month to month, they remain one of the most powerful market movers and have become a symbol of American economic weakness.
Despite widespread reluctance by investors to participate in the stock market before release of the trade data, some Wall Street strategists said the conditions have been laid for some gains over the next several days.
Lack of Demand
“I think barring something totally unforeseen in terms of a negative trade number, we’re setting ourselves up for a fairly significant rally,” said John Conlon, executive vice president and director of equity research at Nikko Securities Co. International in New York.
“There’s been a lot of liquidation over the last week or so by traders and a good deal of skepticism in the market,” he said. “That’s a potent combination for stocks to go up.”
Others were more cautious, based on technical analyses that showed a lack of demand for stocks.
“We’re oversold enough to give us a pop, but based on breadth, I really don’t think we’ll get much to the upside,” Nicoski said.
Advancing issues barely outnumbered declines in nationwide trading of New York Stock Exchange-listed stocks, with volume on the NYSE floor totaling 115.17 million shares, down from Monday’s 142.90 million. It was the lowest level of trading since a 113.72-million-share day Sept. 28.
Prime Computer led the NYSE’s most active list, rising 1 7/8 to 17 3/4 on volume of 2.3 million shares. New York investor Bennett S. LeBow undertook a $20-a-share offer for the company.
Prices Up in Tokyo
J. C. Penney rose 1 to 53 after it reported third-quarter earnings that exceeded expectations. Among other retailers, Dayton Hudson rose 3/8 to 39 5/8 after it reported a 35% gain in third-quarter earnings.
Among gaining blue chips, Woolworth rose 7/8 to 51, General Motors rose 3/4 to 81 1/8 and IBM rose 3/8 to 117 1/2.
Tokyo share prices rose to a record closing high for the third consecutive session Tuesday in moderate, broad-based trading. The Nikkei 225-share index rose 308.51, or 1.08%, to a new record closing high of 28,829.41.
Share prices drifted higher in uninspired dealings on the London Stock Exchange. The Financial Times 100-share index rose 8 to 1,802.3.