FINANCIAL MARKETS : STOCKS : Dow Up 17.49 as Stocks Rally; Bonds Stronger
The stock market rallied behind a strengthening bond market on Thursday, reflecting investor confidence that interest rates are headed lower.
The Dow Jones industrial index of 30 industrials rose 17.49 points to finish at 2,706.27. It was the highest closing since Oct. 12, the day before the stock market plunged 190 points, when the blue chip indicator finished at 2,759.84.
Advancing issues outpaced decliners by about 4 to 3 in nationwide trading of stocks listed on the New York Stock Exchange, with 837 issues up, 629 down and 516 unchanged.
While blue chips issues were strong, however, the secondary market continued to languish, traders said.
Big Board volume came to 153.20 million shares, up from 147.27 million in the previous session.
Wall Street analysts said the market rallied on renewed optimism that interest rates are headed lower. Equities took their cue from firming bond prices after new economic data pointed to a slowdown in fourth-quarter economic growth.
The Commerce Department reported that consumer spending fell 0.2% in October despite a 0.9% rise in personal incomes.
Another report by the Purchasing Management Assn. showed a decline in a Chicago-area economic index for November to 49.1% from 51.7%. Analysts said that set the tone for the purchasing agents’ nationwide survey due out today.
Nationwide, consolidated volume in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 184.94 million shares.
Among actively traded issues on the NYSE, BankAmerica fell 1 1/4 to 26 3/8, Bank of New England lost 1 1/8 to 12 5/8, and Great Western Financial was unchanged at 18 1/8. Ames Department store closed down 1 3/4 at 12 1/2, Telecom USA ended at 24 5/8, down 3/8, and L.A. Gear remained unchanged at 36.
Chevron, the most active NYSE stock, added 1/4 to 68 5/8, General Electric rose 1/2 to 62, Harcourt Brace inched up 1/8 to 5 1/4 and Philip Morris gained 1/2 at 42 3/8.
Stock prices on London’s Stock Exchange rose sharply Thursday in modest trading.
The Financial Times-Stock Exchange 100-share index ended up 21.1 points, or 0.94%, at 2,276.8 points, also its best level.
Bulls continued to dominate the Tokyo Stock Exchange Thursday, lifting share prices to a new high in heavy trading and extending the record-breaking streak to seven straight sessions.
The Nikkei average of 225 selected issues, which rose Wednesday to 37,021.46 yen, rallied 247.33 yen to close at a new landmark of 37,268.79 yen.
CREDIT Bond Prices Higher in Moderate Dealing Bond prices advanced Thursday in moderate dealings as the market awaited more evidence about the state of the economy and the likely direction of interest rates.
The Treasury’s benchmark 30-year bond rose 13/32 point, or about $4 for every $1,000 face amount. Its yield, which rises when the price falls, slipped to 7.89% from 7.93% late Wednesday.
“I think the debt markets are in a trading range now,” said Robert Chandross, chief economist for Lloyds Bank PLC in New York. “They are waiting to get some really new information about the economy.”
He said a report on a survey of purchasing managers in the Chicago area indicated the economy is still declining. The National Assn. of Purchasing Management is to issue its nationwide assessment of the economy today.
The federal funds rate, the interest charge on short-term loans between banks, was quoted late in the day at 8 5/8%, the same as late Wednesday.
CURRENCY Dollar Mostly Lower in Light Trading The dollar was mostly lower in light trading Thursday amid more signs of a slowing economy. Gold prices were mixed.
The dollar fell in response to a Commerce Department report that personal income rose 0.9% in October and rumors that purchasing executives in Chicago believe that the economy is weakening, said Marc Chandler, a currency market analyst with MMS International in Chicago.
Both developments “didn’t contradict the idea that the U.S. economy continued to slow down,” Chandler said.
When the economy slows, financial markets expect the Federal Reserve to nudge interest rates lower. Declining rates make the dollar less attractive, and the U.S. currency tends to fall when yields decline.
The dollar also slipped as traders who had taken profits against the West German mark in recent days began to rebuild their positions, Chandler said.
The dollar fell to 1.7815 marks in New York from 1.7875 late Wednesday after dropping earlier in Frankfurt to 1.7800 marks from late Wednesday’s 1.7825.
Overseas dealers said the dollar fell sharply late in the day on rumors that Fed Chairman Alan Greenspan is resigning because of his one-time consulting role with the troubled Lincoln Savings and Loan Assn.
Joe Coyne, a Fed spokesman, said the rumors were “absolutely not true,” and the denial helped steady the dollar somewhat.
There was brief dollar buying early in the day after the assassination of Deutsche Bank Chairman Alfred Herrhausen, the overseas traders said. They said the buying focused on the potentially destabilizing effect a new wave of terrorism would have on West Germany and its economy.
The dollar lost ground against the British pound. In New York, sterling rose to $1.5700 from late Wednesday’s $1.5678, and in London, the pound rose to $1.5700 from $1.5655.
The dollar also fell against the Japanese yen, declining to 142.80 yen in New York from 142.825 late Wednesday. In Tokyo, the dollar fell to 142.90 yen from 143.35 yen, and it was unchanged in London at 143.15 yen.
Gold prices rose in U.S. trading after falling overseas.
In New York, an ounce of gold rose $2.10 to $411.60 on the Commodity Exchange, and Republic National Bank quoted a late bid of $410.65 for an ounce, up $2.95.
Gold fell earlier in London to a late-bid price of $410.60 an ounce, down from $412.50 late Wednesday. In Zurich, the metal fell to a closing bid of $409.50, down from $411.70 late Wednesday.
In Hong Kong, gold fell $5.59 to a closing bid of $405.76.
COMMODITIES Pork Belly Futures Fall Their Limit Pork belly futures prices plunged the permitted daily limit for the third straight day Thursday on the Chicago Mercantile Exchange as traders disappointed by the low level of exports fled the collapsing market.
Livestock futures finished mixed on the Merc.
On other commodity markets, gold futures rebounded after three days of losses; energy futures rallied, and grains and soybeans were mostly higher.
Frozen pork belly futures settled .40 cent to the limit 2 cents lower, with the contract for delivery in February down 2 cents at 58.55 cents a pound.
In livestock trading, live cattle futures settled .05 to .25 cent lower, with December at 74.97 cents a pound; feeder cattle were .05 to .20 cent lower, with January at 82.62 cents a pound; live hogs were .13 to .33 cent higher, with December at 50.85 cents a pound.
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