Banks’ Support for Dollar Helps Dow Recoup 13.87
Wall Street’s Dow industrials finished higher Thursday, regaining some of the previous day’s losses as investors applauded a joint effort by the world’s leading central banks to boost the dollar from its lows.
But share prices in the broader market remained depressed, with declining issues outnumbering advances by about 4 to 3 in nationwide trading on the New York Stock Exchange.
The Dow Jones index of 30 industrials, which had fallen nearly 89 points during the past six sessions, recovered 13.87 to end at 2,052.45.
Big Board volume came to 141.28 million shares, down from 161.71 million Wednesday.
Impetus From Dollar
“The market acted well today and showed some spunk,” said market analyst Eugene Peroni of Janney Montgomery Scott. “First we need to get leadership in the blue chips.”
Traders said buying in the Dow industrials was triggered by reports that the Federal Reserve and the central banks of Japan, Britain and West Germany moved into the markets and purchased dollars. The intervention marked the first concerted dollar-buying effort since April 14.
“Clearly the market’s impetus was derived largely from the action in the dollar,” said Jack Conlon, head of Nikko Securities’ equities division.
In recent sessions, the dollar’s troubles weighed on the stock market because a falling U.S. currency would discourage investors from acquiring dollar-denominated assets.
The Bundesbank’s participation Thursday after a monthlong absence from the currency market reassured equities investors, especially foreigners, that the Group of Seven industrial powers were serious about preventing a dollar free fall.
But the bearish sentiment surrounding the dollar was so strong that the currency ended the day mixed. It closed up at 1.7225 West German marks from 1.7170, but slipped to 122.05 yen from 122.20.
Although the dollar’s weakness will remain a problem for U.S. stocks, Peroni said he believed the relative cheapness of share prices would continue to draw investors, at least for the next few sessions.
Traders said the stock market showed little reaction to news of a stronger-than-expected 7.2% rise in housing starts last month. The report, the latest in a series of indicators showing continued dynamism in the U.S. economy, depressed bond prices.
In addition, enthusiasm for stocks continued to be restrained by high yields available on short-term, interest-bearing investments such as Treasury bills.
Typically, the most actively traded shares were takeover or “whisper” issues. RJR Nabisco Inc. fell 1 to 82 3/4 on rumors that Kohlberg Kravis Roberts & Co. would withdraw its $20.7-billion bid for the tobacco conglomerate.
In addition, Metropolitan Life Insurance said it was suing RJR Nabisco and its chief executive for planning a buyout that they said would enrich executives at the expense of bondholders.
West Point-Pepperell fell 5/8 to 40 7/8 after saying it would alert regulators to questions about the legality of the financing of Farley Inc.’s $1.3-billion takeover bid.
Holly Farms Corp. declined 7/8 to 51 7/8 after striking an agreement to merge with white knight ConAgra Inc. in a stock swap. Holly’s other suitor, Tyson Foods, said it would raise its takeover bid for Holly to $54 a share, but Holly said it would proceed with the ConAgra merger.
Interco rose 1 5/8 to 65. Cardinal Acquisition Corp., controlled by the Rales brothers, said it allowed its $74-a-share bid for Interco to expire without accepting any Interco shares. Interco said its board would meet next week to consider declaring the third and final dividend under its restructuring program.
Gainers among the blue chips included General Electric, up 7/8 at 43 3/8; Exxon, up 1/2 at 41 1/2; Sears, Roebuck, up 3/8 at 40 3/8, and Eastman Kodak, up 7/8 at 44 5/8.
Elsewhere, Hewlett-Packard rose 7/8 to 46 3/4. The company reported earnings for its fiscal fourth quarter ended Oct. 31 of $1.03 a share, up from 85 cents in the year-ago period.
Veeco Instruments, which agreed to be acquired by Unitech PLC for $26.50 a share, jumped 1 7/8 to 24 3/4.
Record in Tokyo
The Wilshire index of 5,000 equities finished at 2,614.470, up 3.601 from Wednesday’s close.
The NYSE’s composite index of all its listed common stocks edged up 0.28 to 149.24.
Standard & Poor’s industrial index rose 1.09 to 303.93; its 500-stock composite index was up 0.78 at 264.60.
NASDAQ’s composite index slipped 0.36 to 367.43; the American Stock Exchange index closed at 285.37, down 0.93.
In Tokyo, share prices recovered from early losses to close at a record high for the fifth straight session Thursday. The Nikkei 225-share index rose 80.69 to a record close of 29,076.81.
Share prices also rose strongly on the London Stock Exchange, boosted by takeover speculation. The Financial Times 100-share index rose 16.3 to 1,823.6.
