STOCKS : Dow Rises 17.58 on Lower Rates and Gulf News
Stock prices closed higher Wednesday, buoyed by a sharp fall in oil prices and interest rates after the Organization of Petroleum Exporting Countries said its members can increase production.
The Dow Jones industrial average closed up 17.58 points at 2,632.43. Advancing issues outnumbered declines by more than 9 to 5 on the New York Stock Exchange, with 972 up, 508 down and 512 unchanged.
Analysts said stocks were also buoyed by the belief that the Persian Gulf crisis was easing.
“The crude oil price broke, and bonds as a consequence went crazy,” said Bear Stearns technical analyst Jack Solomon. Bond yields plunged as inflation fears eased.
The stock market rise also was a continuation of a technical rally, which analysts said began Friday after the Dow tumbled from 2,999 in mid-July to about 2,483.
“We’re still seeing the tail end of a reaction to what was a very, very steep decline,” said Yamaichi International portfolio strategist Andrew Riley.
But volume continued to be light as many investors stayed away. Big Board volume was a modest 134.2 million shares versus 127.6 million Tuesday. Analysts said the real test for the market will be next week after vacation season ends and many traders return to Wall Street. Market highlights:
* Utilities and airlines gained on the oil and interest rate news. The Dow utility index rose 2.01 to 195.61, or 1%. The Dow transportation index rose 11.31 to 911.13, or 1.3%, led by AMR, up 1 1/4 to 46 1/4, and USAir, up 1 3/8 to 17 1/4.
* Among broader indexes, over-the-counter stocks were mostly lower. The NASDAQ OTC composite lost 1.08 to 381.78, or 0.3%. Many high-tech stocks that had gained in recent sessions were hit by profit taking. 3Com tumbled 3 7/8 to 8 3/4 after the computer-communications systems firm suggested business was softening. Elsewhere, Novell lost 1 to 25 1/2, Apple Computer slipped 7/8 to 37 1/4 and Microsoft dropped 2 3/8 to 60 1/2.
But El Segundo-based Wyle Labs rose 1 1/8 to 12 1/8 after the electronic components firm said it was on track to post significantly higher earnings in the year that will end next Jan. 31.
* Electronics distributor Anthem Electronics plunged 3 3/8 to 21 1/2 after brokerage Smith Barney lowered its rating on the stock from buy to hold, saying it expects business to slow. But Marshall Industries, an Anthem competitor, gained 1/2 to 21 5/8.
* Though oil prices fell sharply, oil shares resisted selling. Chevron added 1 1/8 to 76 3/4, Exxon was off 1/4 to 49 7/8 and Texaco edged up 1/2 to 63 1/4. Arco rose 1 5/8 to 135 3/4 and Mobil added 5/8 to 63 7/8.
* Drug stocks were strong as investors once again flocked to stocks of recession-resistant firms. Lilly rose 1 7/8 to 75 3/8; Johnson & Johnson gained 1 1/4 to 66, and Immunex jumped 2 to 27. Likewise, investors snapped up food stocks. Pepsico rose 2 to 75 1/8; Hershey added 1 7/8 to 37 1/2, and Kellogg gained 1 1/8 to 64 1/8.
* LA Gear rose 1 1/4 to 16 1/2 as vague takeover rumors circulated again. But some traders said the rise was mostly short-covering.
* Litton gained 1 to 75 3/4 on strong fourth-quarter earnings and expectations the firm will continue to buy back stock.
* Duarte-based Barry’s Jewelers plunged 1 1/2 to 4 1/4 after reporting a loss of $2.42 a share in the May 31 quarter on lower revenue.
In Japan, fears of climbing interest rates knocked Tokyo shares down. The 225-share Nikkei average closed down 815.97 points, or 3.2%, at 24,894.79.
In London, stocks finished slightly lower in quiet trading. The Financial Times 100-share index ended down 0.4 point at 2,125.7. In Frankfurt, West Germany, the DAX index closed at 1,637.66 for a rise of 19.77 points or 1.2%.
CREDIT Bond Prices Jump on Inflation Hopes Bond prices advanced sharply on the drop in oil prices, sending yields down.
The Treasury’s bellwether 30-year bond was up 1 7/32 point, or about $12.18 per $1,000 face amount. Its yield, which falls when the bond’s price drops, fell to 8.92% from late Tuesday’s 9.04%.
The federal funds rate, the interest rate banks charge each other on overnight loans, was quoted at 8%, unchanged from late Tuesday.
CURRENCY Dollar Rises in Domestic Trading The dollar moved mostly higher in U.S. trading after a mixed performance overseas as currency dealers began adjusting their holdings ahead of the long holiday weekend in the United States.
Domestic currency dealers said the dollar’s advance came as a byproduct of trading in German marks and Japanese yen, which captured most of the attention.
In New York the dollar closed at 143.55 yen, down from 143.75 on Tuesday. But the dollar closed higher against the German mark, at 1.560 versus 1.556.
COMMODITIES Gold, Silver Futures Halt Their Plunge Precious metal futures halted their plunge on New York’s Commodity Exchange, largely disregarding tumbling oil prices.
Trading volume fell from Tuesday’s level due to increased margins on gold and silver contracts demanded by the Comex. The move makes trading more expensive and dampened market enthusiasm, said Don Tierney, analyst with Stanley Bell & Co.
After losing more than $30 in recent trading sessions, spot gold inched up 30 cents to $385.30 an ounce. But spot silver slipped 1.4 cents to $4.83.
Market Roundup, D8
