Dow Up 16.53 to Another Record
Wall Street stocks jumped to a record close Wednesday, swept up in the momentum of Tuesday’s rally when the Dow soared more than 40 points.
The Dow Jones industrial average rose 16.53 points to close at 2,771.09, breezing past the 1-day-old record closing of 2,754.56 set Tuesday with the help of a strong dollar and computer-buy programs.
This week, the 30-share Dow index has leaped about 76 points, shaking off a September slump that threatened to undermine a powerful summer rally on Wall Street. The dollar’s recent steadiness in the face of intervention is a key factor in the rally.
Advancing issues outnumbered declines by about 5 to 4 in nationwide trading of New York Stock Exchange-listed stocks, with 831 up and 656 down.
Big Board volume was 194.59 million shares, up from 182.55 million in the previous session. Analysts noted some “catch-up” buying by investors who were caught off guard by the market’s resurgent rally this week.
“It was impressive today. I know it’s getting some fence sitters off the fence,” said Daniel Williams, head trader at Dillon Read.
Traders said a rebound in technology issues helped fuel the advance, especially in bellwether IBM, which failed to participate in Tuesday’s rally. IBM rose 2 1/4 to 108 1/4 in heavy trading Wednesday.
Stock prices struggled with profit taking intermittently throughout the session, but the selloffs were brief.
The new advance in stock prices was attributed in large measure to persistent strength in the dollar and declining interest rates.
On the Tokyo Stock Exchange, stock prices closed mixed in moderate trading. The Nikkei 225-share average, which plunged 256.60 points Tuesday, gained 16.43 points to end at 35,382.80.
Share prices ended lower on London’s Stock Exchange as continued weakness in sterling exacerbated fears of a hike in British interest rates. The Financial Times 100-share index fell 6.5 points to close at 2,312.1.
Credit
Government bond prices finished slightly lower as trading slowed in advance of an important economic report later this week on employment in September.
The Treasury’s benchmark 30-year bond lost 1/16 point, or about 63 cents for every $1,000 in face amount. Its yield held steady at 8.16%, unchanged from late Tuesday.
Corporate issues also dipped, but tax-exempt municipals advanced.
In the secondary market for Treasury bonds, prices of short-term, intermediate and long-term governments were all down by between 1/16 point and 3/32 point, the Telerate Inc. financial information service reported.
The movement of a point equals a change of $10 in the price of a bond with a $1,000 face value.
The Shearson Lehman Hutton daily Treasury bond index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, lost 0.72 to 1,174.05.
Moody’s investment grade corporate bond index, which measures total return on a portfolio of 80 corporate bonds with maturities of five years or longer, fell 0.08 to 329.70.
The federal funds rate, the interest on overnight loans between banks, was quoted at 8.25%, down from 9% late Tuesday.
But analysts said the relatively low funds rate was due to technical conditions in the short-term market for bank borrowings as Wednesday marked the end of a bank reserve reporting period.
Currency
The dollar was mixed against major currencies in fairly quiet trading with traders cautious ahead of the meeting of West Germany’s central bank.
Some analysts expect the Bundesbank to raise its key lending rates when it meets today in an effort to push the dollar lower. Its discount rate now stands at 5% and the Lombard rate is at 7%.
“All eyes are watching the Bundesbank tomorrow,” said Ronald Holzer, chief currency broker for Harris Trust & Co. in Chicago.
West Germany is one of seven industrial nations, including the United States, that have joined in a concerted effort to weaken the dollar.
Analysts said if intervention fails, the backup plan is for some countries to raise their interest rates.
Higher West German interest rates would make mark-denominated assets more attractive than dollar holdings and would tend to boost the mark against the U.S. dollar.
If the Bundesbank decides to raise interest rates, other central banks probably will follow, analysts said.
In Tokyo, the dollar fell 0.05 yen to a closing 140.60 yen. Later, in London, it was quoted at 141.05 yen. In New York, the dollar traded at 141.475, up from 141.20 late Tuesday.
In London, the pound traded at $1.6055, unchanged from late Tuesday. In New York trading, the dollar strengthened as the pound changed hands at $1.6020, down from $1.6045 late Tuesday.
Gold traded in London late Wednesday at $366.25 an ounce, up slightly from late Tuesday’s $365.50.
In Zurich, the bid price was $366, up from $365.25 late Tuesday. Gold closed in Hong Kong unchanged at $366.50.
On the Commodity Exchange in New York, gold bullion for current delivery closed at $367 an ounce, up from $366.30 on Tuesday. Republic National bank of New York said gold was bid late in the day at $366 an ounce, up from $365.50 on Tuesday.
Commodities
World coffee prices sank to another 14-year low amid deepening pessimism about the prospects for a return to the price-support measures abandoned by the International Coffee Organization in July.
On other commodity markets, sugar futures climbed sharply, precious metals were higher, energy futures mostly were lower and grain and livestock futures were mixed.
Coffee futures settled 2.5 cents to 3.7 cents lower on New York’s Coffee, Sugar & Cocoa Exchange, with the contract for delivery in December at 73.03 cents a pound, the lowest settlement for a near-month coffee contract since late 1975.
The International Coffee Organization’s latest indicator of the average price of coffee traded throughout the world, released Wednesday, was 64.31 cents a pound, also a 14-year low.
Market analysts called the sell-off a continuation of Tuesday’s steep slide, which was triggered when Jorio Dauster, Brazil’s chief coffee executive, said there was no chance of an early return to an export quota system designed to keep excess world production off the market.
World sugar futures soared on the Coffee, Sugar & Cocoa Exchange amid indications that India had made a major sugar purchase. Sugar settled 0.31 to 0.75 cent higher, with January at 13.85 cents a pound.
Gasoline led most energy futures lower on the New York Mercantile Exchange in reaction to Tuesday’s weekly American Petroleum Institute report showing increased U.S. supplies of crude, gasoline and petroleum distillates.
West Texas Intermediate crude oil settled 11 cents lower to 2 cents higher, with November at $20.15 a barrel; heating oil was 0.10 to 0.69 cent lower, with November at 58.99 cents a gallon, and unleaded gasoline was 0.40 cent to 1.23 cents lower, with November at 55.41 cents a gallon.
Grain and soybean futures finished mixed on the Chicago Board of Trade as harvest-related selling offset buying linked to new export sales of U.S. wheat and corn.
Wheat futures settled 0.50 cent lower to 2 cents higher, with December at $4.0925 a bushel; corn was 1.50 cents lower to 0.50 cent higher, with December at $2.39 a bushel; oats were 0.50 cent to 1.50 cents lower, with December at $1.4625 a bushel, and soybeans were 1.75 cents lower to 0.75 cent higher, with November at $5.765 a bushel.
Profit taking pressured pork futures on the Chicago Mercantile Exchange while slack beef demand weighed on live cattle futures. But strong cash markets boosted feeder cattle.
Live cattle settled unchanged to 0.30 cent lower, with October at 71.05 cents a pound; feeder cattle were 0.10 to 0.40 cent higher, with October at 83.15 cents a pound; live hogs were 0.10 to 0.63 cent lower, with October at 44.77 cents a pound, and frozen pork bellies were 0.33 to 0.88 cent lower, with February at 48.17 cents a pound.
