STOCKS : Dow Rises 45.50 in Heaviest Trading of 1990
Wall Street stocks posted their biggest jump in six weeks Friday, bolstered by a series of reports showing a sluggish economy that may lead to lower interest rates.
The Dow Jones industrial index climbed 45.50 points or 1.69% to close at 2,741.22, helped by an afternoon buying spree and a strong bond market. For the week, the index rose 57.89 points, or 2.16%.
Advancing issues outnumbered declines by about 3 to 2 in New York Stock Exchange-listed stocks, with 884 up, 591 down and 481 unchanged.
Investors dived into the market with a vengeance, lifting volume on the New York Stock Exchange to a record for the year of 222.5 million shares, compared to Thursday’s moderate 144.4 million shares.
The Dow’s gain was the biggest since Jan. 31, when it rose 47.30 points. Volume was the highest since Dec. 15, when turnover reached 240.4 million shares.
“This is a seductive rally,” said Dennis Jarrett of Kidder, Peabody & Co. “It’s enticing, it will get people a little more excited. When individual stocks move up a point or a point-and-a-half two or three days in a row, it gets the adrenaline flowing.”
The government’s wholesale price index, home construction report and factory output figures for February all pointed to a surprisingly sluggish economy and restrained inflation.
A drop in energy costs tamed inflation at the wholesale level, leaving the February producer price index unchanged after January’s shocking 1.8% jump.
The expiration of stock options, index futures and options on futures--the so-called triple-witching hour--also fueled the market’s rise, as investors used their new-found cash to buy stocks.
Airline stocks rose sharply after a Salomon Bros. analyst repeated his buy recommendation on the group, arguing that air fares would rise as a result of an American Airlines fare restructuring.
AMR, the parent of American Airlines, soared 2 1/8 to 65 1/4; UAL, the parent of United Airlines, jumped two to 142 1/2; Delta climbed 1 3/4 to 71 3/4, and USAir Group rose 5/8 to 30 7/8.
Prices on the Tokyo Stock Exchange fell marginally Friday after a morning surge as investors took a wait-and-see attitude about an expected announcement of an increase in the discount rate. The blue chip Nikkei stock index of 225 selected issues, which rose 319.51 points Thursday, lost 55.20 points to close at 32,616.44.
In London, share prices finished firmer in a moderately active session. The Financial Times stock exchange 100-share index was up 29 points at 2263.9. CREDIT Economic Data Sends Bonds Higher
Bond prices shot up Friday as traders detected weakness in the nation’s manufacturing sector and signs that the economy remains sluggish and inflation in check.
The Treasury’s benchmark 30-year bond climbed 13/16 point, or $8.13 per $1,000 face amount. Its yield, which rises when prices fall, fell to about 8.54% from 8.61% late Thursday.
The government released three reports on February economic statistics. But analysts said figures showing no change in wholesale prices and a 7% decline in housing starts during the month had little effect because of the influence of unseasonable weather.
Instead, bond prices climbed after the Federal Reserve said industrial production rose 0.6%, less than economists had anticipated and largely due to a return of automobile workers after January slowdowns.
The federal funds rate, the interest rate banks charge each other on overnight loans, was quoted at 8.1875%, down from 8.25% late Thursday. CURRENCY Dollar Declines, Gold Prices Rise
The dollar declined Friday against most major foreign currencies with buyers focusing on the Swiss franc and West German mark.
Gold prices gained in domestic and overseas dealings.
Republic National Bank of New York quoted a bid for an ounce of gold at $400 as of 4 p.m. EST, up $1.80 from Thursday’s late bid. On New York’s Commodity Exchange, gold for March delivery settled at $399.60 an ounce, $1.50 higher than Thursday.
Currency dealers said a bearish attitude toward the dollar prevailed in foreign exchange markets. Interest in trading dollars slackened in the New York afternoon, which is typical before a weekend. COMMODITIES Actions in Brazil Spark Sugar Rally
Uncertainty about the outcome of a new program to fight hyper-inflation by Brazil’s new president sent coffee and soybean prices sharply lower Friday but helped spark a rally in sugar.
The Brazilian government’s decision to abolish the Brazilian Coffee Institute contributed to a sharp drop in arabica coffee traded on the New York Coffee Sugar Cocoa Exchange.
The most active May coffee contract staged a free fall of 5.98 cents to end at 90.40 cents a pound.
