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Dow Rises 34 to 2,935.19, Another Record Close

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From Times Wire Services

The stock market Monday soared to a second straight record close, as the prospect of lower interest rates spurred a stampede of buy orders on Wall Street.

The Dow Jones index of 30 industrials, up 80.05 points last week, jumped 34.22 to 2,935.19. Since April 27, the average has soared 290.14 points, or 10.9%.

In the broader market, advancing issues outnumbered decliners by more than 2 to 1 in nationwide trading of New York Stock Exchange-listed stocks, with 1,105 up, 477 down and 439 unchanged. Big Board volume came to 175.52 million shares, against Friday’s 187.86 million.

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The market was little changed much of the day, but buying exploded in the final hour of trading.

“There’re some signs of a buying panic here,” said Gene Jay Seagle, analyst at Gruntal & Co. Traders said computer-driven program trading was partly responsible for the late surge, as was short covering by traders who had bet that the market would drop.

Traders were encouraged by the economic weakness present in Friday’s unemployment report for May, which showed a surprisingly lax pace of new job growth.

The report suggested that the economy was growing more slowly than previously thought, increasing the chances that the Federal Reserve will ease credit.

Stocks had opened lower, encountering resistance after the Dow closed above the 2,900 level for the first time Friday.

Blue chips moved modestly higher but traded in a narrow range most of the day. “When nobody showed up to take profits in the first hour of trading or so, the buyers came back in,” said William Raftery, analyst at Smith Barney.

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Banks, S&Ls; and other financial stocks rocketed higher on expectations of lower interest rates. Wells Fargo jumped 3 5/8 to 84 1/2; HomeFed of San Diego added 1 to 30 1/2; Security Pacific rose 1 7/8 to 42 1/4, and Broad Inc. gained 1 to 9 3/4. Also, Federal National Mortgage climbed 2 to 43 5/8, and Federal Home Loan Mortgage rose 3 3/8 to 79 7/8.

First Interstate soared 6 1/8 to 44 5/8, partly on speculation of a takeover bid.

Wal-Mart Stores rose 2 1/4 to 60 5/8. On Friday, Chairman Sam Walton projected a doubling in the number of the company’s stores by the end of the 1990s.

Among Southland stocks moving sharply, Amgen rose 2 1/4 to 75 1/2, Hilton rose 1 5/8 to 55 1/2 and Marshall Industries gained 2 to 27 7/8.

L.A. Gear inched up 1/8 to 30 5/8 in heavy trading, stabilizing after Friday’s 8 1/2-point loss on lowered earnings expectations.

Gainers among the blue chip industrials included Philip Morris, up 1 1/4 at 44 1/2; American Express, up 1 7/8 at 31 5/8; Boeing, up 1 5/8 at 86 3/8, and Coca-Cola, up 1 1/4 at 46 1/2.

In Tokyo, stocks closed mixed in moderate volume as the impact of a weaker yen was offset by Friday’s gains on Wall Street. The key 225-share Nikkei index rose 34.25 points to 32,925.37 after falling 239.68 on Friday.

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In London, share prices closed higher after a quiet session. The Financial Times 100-share index rose 7.6 points to close at 2,379.0.

CREDIT Bond Prices Climb as Commodities Fall Bond prices rose in moderate trading, led by weaker commodities prices and a stronger dollar against the British pound and Japanese yen.

Analysts said the prices of Treasury securities were expected to pause after a rally until the release of May inflation data from the government next week.

The Treasury’s benchmark 30-year bond gained 7/32 point, or $2.25 per $1,000 face amount, following last Friday’s $15 rise. Its yield, which falls when prices rise, declined to 8.42% from 8.44% late Friday. That was the lowest yield since February.

Kevin Flanagan, a money market economist with Dean Witter Reynolds, said a stronger dollar and lower commodities prices--which both indicate less inflation--contributed to Monday’s rise.

The federal funds rate, the interest rate banks charge each other on overnight loans, was quoted at 8.25%, unchanged from Friday.

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CURRENCY Dollar Declines in Lackluster Trading The dollar declined against most major currencies except the British pound and Japanese yen in domestic trading after a mixed performance overseas.

Trading volume was light because most European markets were closed for a holiday.

Treasury Secretary Nicholas F. Brady’s comments implying that U.S. interest rates could be heading lower knocked the dollar down as trading ended in New York. The result was that the dollar closed near its lowest levels of the session.

Brady, speaking at the International Monetary Conference luncheon in San Francisco, expressed optimism that a budget agreement between Congress and the Bush Adminstration could be reached that would reduce rates.

Currency dealers said the impact of Brady’s remarks was exaggerated because of the low liquidity in the market. Markets in continental Europe were closed for the Whit Monday holiday; only London’s markets were open in Europe.

COMMODITIES Gold Depressed by Soviet Debt Worries Gold on the New York Commodity Exchange fell to 8 1/2-month lows Monday before regaining its footing to close only slightly lower for the day.

Traders said the metal was depressed by speculation that the Soviet Union was using some of its huge supply of gold as collateral for hard currency to pay its trade debts. Western bankers have said that the unpaid debt could threaten the country’s credit-worthiness.

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The August gold delivery finished $1.10 an ounce lower at $362.40, after having fallen to $359.60, the lowest since last September. Spot gold was off 60 cents at $358.60 an ounce.

Meanwhile, grain and soybean futures prices closed mostly lower on the Chicago Board of Trade as the weather forecast continued to be the guiding force of the market.

On other markets, energy futures were lower and livestock and pork futures were mostly higher.

Soybean futures were sharply lower as a result of rapid soybean planting in recent days, said Steve Freed, an analyst with Dean Witter Reynolds in Chicago. The amount of rain during the past weekend was not as great as expected, allowing planting to proceed, analysts said.

Competition in the export market from South America also weighed on the soybean market, with a dock strike in Brazil not expected to last long enough to cause soybean business to shift to the United States, Freed said.

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