STOCKS : Dow Gains 29 Assisted by a Rising Dollar
The stock market staged a surprising late-afternoon rally Tuesday, sparked by computer-assisted futures trading and by a steady upward march in the dollar.
The Dow Jones index of 30 industrials jumped 29.28 points to finish at 2,736.94, after slipping below the 2,700-mark just after midday.
In the broader market, advancing issues outnumbered declining issues in nationwide trading of New York Stock Exchange-listed stocks, with 889 issues up, 569 down and 505 unchanged.
Big Board volume totaled 131.61 million shares, up sharply from Monday’s 116.11 million.
The market opened lower then drifted in a fairly narrow range through much of the day. Analysts said lack of institutional buying kept the market from gaining any momentum.
Global uncertainties, including Japan’s volatile stock market and high interest rates, as well as nervousness about the possibility of disappointing first-quarter corporate profits, were among the factors affecting the market in early dealings, analysts said. Corporate profits have been in a recession since the second quarter of last year.
Hugh Johnson, chief investment officer at First Albany Co., said the dollar’s strength, particularly against the yen, was a boon to the market.
The market showed a glimmer of life after hitting the day’s lows around midday and gradually began a steady advance. Wall Street analysts said computer-assisted program trading started a wave of buying that soon attracted “real buyers” anxious to put spare cash to work at the end of the quarter.
“It was a surprise to most market watchers--a little program activity and investment activity and trading optimism and we had a nice rally,” said Michael Metz, technical analyst for Oppenheimer & Co.
Drug, airline and oil stocks benefited from the initial advance, which spread to the broader market by the end of the session.
Among actively traded issues on the NYSE, American Express fell 1/4 to 26 5/8 after sweetening its stock-swap offer for the shares of Shearson Lehman Hutton Holdings it doesn’t already own.
Circle K, which said it was not in compliance with certain financial covenants and was holding debt-restructuring talks with lenders, declined 3/8 to 1 3/4.
JP Industries gained 7/8 to 16 7/8, IBM added 3/8 to 104 1/2, Philip Morris rose 1/8 to 39 1/2 and General Electric advanced 7/8 to 64 7/8.
In London, prices dropped sharply as a major sell program and some disappointing domestic earnings reports depressed the market. The Financial Times 100-share index fell 32 points, or 1.4%, to close at 2,266.2.
CREDIT: Bonds Dip a Bit in Very Quiet Trading
Bond prices were slightly lower in quiet trading, although traders said a Treasury auction of two-year notes was well received.
The benchmark 30-year Treasury bond fell 3/32 point, or 94 cents per $1,000 in face value. Its yield was unchanged from late Monday at 8.46%.
“We hardly had any price action,” said Steven A. Wood, economist with BankAmerica Capital Markets in San Francisco. “This reminded me a lot of a Friday after Thanksgiving or the day before New Year’s. It was that quiet.
“It looks like everybody is sitting on the sidelines waiting for something to happen,” he said.
But he said there were no economic data that appeared able to shake the market out of the doldrums until figures are released starting next week on how the economy performed in March.
Bond prices traded in very narrow ranges, with most government securities falling, analysts said.
The federal funds rate, the interest rate banks charge each other on overnight loans, was quoted at 8.25%, unchanged from late Monday.
COMMODITIES: Gold Up Slightly After Huge Selloff
Gold prices staged a weak recovery but analysts said most major players stuck to the sidelines, trying to assess the causes and effects of Monday’s dramatic decline.
“It’s a very cautious market,” said Bette Raptopoulos, a metals analyst with Prudential-Bache Securities Inc.
On other commodity markets, silver and platinum prices continued lower; copper futures fell; most grain and soybean futures dipped; energy futures were mixed, and livestock and meat futures were mostly lower.
Gold futures settled $1.90 to $2.90 higher on New York’s Commodity Exchange, with the contract for spot delivery up $2.90 at $368.70 an ounce and the contract for delivery in April at $369.10 an ounce.
Gold prices tumbled more than $20 an ounce Monday after a Saudi Arabian investment syndicate sold $1 billion in gold bullion, 3 million ounces, in London.
The huge order mystified traders and analysts, prompting speculation that the sale represented everything from a simple shift in investment strategy to a checkmate move in a game of international intrigue.
Traders said the Saudi sale was too much for the market to absorb at one time. Dealers who bought from the Saudis all sought to resell to other dealers, only to find they were themselves looking to sell.
“The sale strategy was not typical of the Saudis,” said one trader, who suggested that “it may have been the result of some crisis situation.”
Analysts noted that gold prices had been trending lower for two months after peaking at $425 on Jan. 24.
