STOCKS : Late Rally Pushes Dow Up By 23.89
The stock market closed sharply higher on Wall Street Tuesday after a late afternoon rally that traders attributed to a surge among oil issues and bargain-hunting among battered technology shares.
The Dow Jones average of 30 industrials gained 23.89 to close at 2,752.13.
Advancing issues outnumbered decliners by about 7 to 5 in nationwide trading of New York Stock Exchange-listed stocks, with 900 issues up, 651 down and 475 unchanged.
Big Board volume totaled 176.82 million shares, up from Monday’s 147.13 million.
Oil companies accounted for seven of the 13 most actively traded issues on the Big Board.
Phillips Petroleum and Exxon traded the most heavily, with Phillips up 1 3/8 to 25 7/8 and Exxon up 1 1/2 to 51 1/4. Phillips’ rise was attributed to a $250-million stock buyback announcement Monday and a higher earnings estimate for 1990.
Among other oil issues, Pennzoil gained 1 3/8 to 87 5/8, Royal Dutch Petroleum shot up 3 1/4 to 76 3/4, Mobil increased 1 5/8 to 63, Texaco gained 1 1/2 to 57 1/8, Chevron rose 1 1/4 to 68 1/8 and Unocal was 1 1/2 higher to 30 5/8.
Stock prices on the Tokyo Stock Exchange closed mixed in dull trading as speculators pulled back from a strong morning rally because of a lack of fresh incentives. The Nikkei 225-share average rose 50.86 points to 37,803.53.
In London, stocks rose in heavy volume, reflecting a strong response to the debut of trading in Britain’s privatized water companies. The Financial Times 100-share index ended 12.1 points higher at 2,363.5.
CREDIT
Bond Prices Ignore Weakness in Dollar Bond prices were little changed in light trading, largely shrugging off weakness in the dollar and a big jump in stock prices.
The Treasury’s key 30-year bond fell 1/32 point, or 31 cents per $1,000 in face value, while its yield edged up to 7.89% from 7.88% on Monday.
Analysts said trading was lackluster as dealers awaited the government’s latest data on producer prices, merchandise trade and industrial production, due out Friday.
Those reports are expected to shed more light on the economy’s direction, and subsequently, the Federal Reserve’s policy on interest rates.
Any weakness in bonds came from the stock market’s rise and softness in the dollar, but there was little movement of any kind, said Jay Goldinger, chief market strategist for Capital Insight Inc. in Beverly Hills.
The federal funds rate, the interest on overnight loans between banks, was unchanged from Monday at 8.438%.
CURRENCY
Dollar Hits 1-Year Low Against Mark West Germany’s mark dominated foreign exchange trading Tuesday, strengthening on firm interest rates in that country and talk of a reunified Germany that helped sharply depress the dollar and other currencies. In both New York and Europe, the dollar hit a one-year low against the mark, traders said.
“The scenario here is that interest rates in Germany will stay firm . . . while U.S. rates are trending down because the economy is slowing,” said Earl I. Johnson, a currency trader at Harris Trust & Co. in Chicago.
“It’s not so much the dollar’s weakness as it is the mark’s strength. The mark is the place to be right now.”
The mark has risen sharply in recent weeks amid rapid political and economic reforms in East Germany. Traders speculate that West Germany’s economy will flourish, pushing interest rates higher, as boundaries between East and West Germany diminish.
High interest rates tend to support a currency.
The dollar was quoted in London at 1.7335 marks, off from 1.7660 marks late Monday, and in New York at 1.73225 marks, down from 1.7610. Both closing rates were the lowest since December, 1988, according to traders.
The dollar also dipped below 6.00 French francs for the first time since Dec. 16, 1988, finishing at 5.9275 francs in Europe, down from 6.0370 francs late Monday. It finished at 5.9185 francs in New York, down from 6.0200.
Against the British pound, the dollar also weakened. Sterling rose to $1.6027 from $1.5895 in London late Monday, and $1.6085 from $1.5937 in New York.
In Tokyo, where trading ends before Europe’s business day begins, the dollar fell 0.18 yen to close at 144.47 yen.
COMMODITIES
Gold Inches Closer to High for the Year Gold futures prices inched nearer to new highs for the year on New York’s Commodity Exchange after taking a quick breather from their energetic advance of the previous five sessions.
On other commodity markets, silver futures slipped; oil futures were mostly lower; grains and soybeans were mixed, and livestock and meat futures were mixed.
Gold futures settled 80 cents to $1.10 higher, with the contract for delivery in December up $1.10 at $417.90 an ounce, just $1.80 shy of the 1989 high of $419.70 set Nov. 24.
Gold has rallied from $401 an ounce in the past six sessions. But the bulls appeared to be weakening early in Tuesday’s back-and-forth trading, which saw the December contract dip as low as $415.30 before recovering late in the session.
Analysts said investors were drawn from the gold market by strong advances in the stock market and in the British pound and West German mark.
