STOCKS : Gulf Calm Lifts Asian Stocks; Dow Up 24.51
Asian stocks posted strong gains in midday trading today after President Bush announced a halt in fighting in the Persian Gulf.
On the Tokyo Stock Exchange, the Nikkei index was up 468.83 points, or 1.8%, to 26,563.08 in afternoon trading. The index had lost 188.71 points on Wednesday.
Among other Asian markets, news of Bush’s evening address to the nation helped send stocks in Taiwan up 3.4%, as the weighted-index jumped 163.55 points to 5,033.37 in midday trading. In Singapore, the Straits Times index gained 17.99 points, or 1.3%, to 1,461.34 by midday.
In U.S. trading Wednesday, blue chip stocks snapped a six-day losing streak as investors took advantage of the market’s recent weakness to fatten their portfolios.
The Dow Jones industrial average, down 69.65 points over the past six trading days, rose 24.51 points or 0.9% to 2,889.11. Advancing issues outnumbered declines by more than 2 to 1 in nationwide trading of New York Stock Exchange-listed stocks, with 1,063 up, 503 down and 457 unchanged.
Big Board volume soared to 211.41 million shares, up from 164.17 million Tuesday.
“Periods of consolidation are opportunities to accumulate stocks,” said Allen Sinai, chief economist at Boston Co. “I think the basic thrust of stocks is still up.”
Peter Davies, a vice president at Nomura Securities, said institutional investors seeking to add to their portfolios were using the market’s recent weakness as a buying opportunity.
As the Persian Gulf War ends, the market’s attention has veered to other matters, including the economy and corporate earnings. Stocks were helped by new signs that the recession’s severity may have been overestimated, as the government said fourth-quarter gross national product fell by slightly less than estimated.
Even so, buyers on Wednesday took a cautious attitude toward the market, favoring mostly bigger, safer stocks rather than the small stocks that have recently led the Persian Gulf War rally. The New York Stock Exchange composite index advanced 1.3%, while the NASDAQ index of smaller stocks gained just 0.7%.
Among the market highlights:
* Companies that may benefit from contracts to rebuild Kuwait continued to soar. Among construction and engineering firms, Caterpillar jumped 3 1/4 to 53 1/2, Ingersoll-Rand was up 3 7/8 to 51 3/4, Fluor soared 4 5/8 to 52 5/8 and Jacobs Engineering rocketed 4 to 39 3/8.
Rail giant CSX jumped 2 5/8 to 38 after its Sea-Land logistics unit received a Kuwaiti contract.
GM rose 1 7/8 to 37 7/8 on expectations of higher car sales to Kuwait.
* Oil and oil-services stocks also advanced. An analyst at C. J. Lawrence reaffirmed buy recommendations on nine oil firms, citing an expected 14% average advance in 1991 earnings for the group. The stocks are undervalued, the analyst said. Arco rose 4 3/8 to 131 7/8, Chevron gained 2 1/4 to 74 1/2, Exxon added 2 to 55 3/4 and Unocal rose 1 1/2 to 27 1/2.
Among oil-services firms, Halliburton jumped 2 7/8 to 54 1/8, Baker Hughes gained 1 1/4 to 29 7/8 and Oceaneering rose 1 1/4 to 13 1/4. Those companies are expected to benefit from the rebuilding of Kuwait’s oil fields.
* Three stocks in the Dow average were hit hard. Westinghouse fell 1 7/8 to 27 1/4 after taking a $975-million charge and restating fourth-quarter results. Woolworth lost 1 1/4 to 33 1/4 after it reported disappointing fourth-quarter profits. And Procter & Gamble gave up 2 1/8 to 81 5/8 on a report that it is cutting costs to deal with the recession.
* Insurer USF&G; fell 1 3/4 to 8 3/4. It posted a huge fourth-quarter loss and slashed its dividend.
* Among Southland stocks, biotech firm Amgen sank 4 1/4 to 93 1/4 as several analysts voiced concern about the stock’s recent sharp run-up. Recreational-vehicle maker Fleetwood Enterprises added 3/8 to 25 despite reporting quarterly earnings of 9 cents a share, down from 40 cents a year earlier. The report was expected. Sports-product company Anthony Industries jumped 1 5/8 to 8 7/8 on a bullish report by brokerage A.G. Edwards.
Also, Great Western Financial gained 1 to 16 3/4 after its chief executive said the S&L;'s earnings should be stronger this year than last, and that loan-loss reserves should be lower.
In overseas trading, London’s stocks were buoyed by the rally on Wall Street as the allies freed Kuwait. The Financial Times Exchange 100-stock average soared 25.8 points, or 1.2%, to 2,348.0.
Scattered gains helped the German market recover from early lows and end 0.5% higher. The 30-share DAX index finished 7.28 points higher at 1,565.52. Meanwhile, in Paris, the CAC 40 index gained 18.71 points, or 1.1%, to 1,731.02.
Government bond prices closed unchanged to slightly lower but were boosted from their opening lows by an economic report that investors interpreted as favorable.
The Treasury’s bellwether 30-year bond slipped 3/32 point, or 94 cents per $1,000 face amount. Its yield rose to 8.14% from 8.13% late Tuesday.
Bond prices fell at the start of trading but then recovered after the Commerce Department reported that the gross national product declined at an annual rate of 2% from October through December.
Though less of a drop than originally estimated, bond investors still saw the report as an indication that interest rates may have further to fall because of economic weakness, traders said.
The federal funds rate, the interest on overnight loans between banks, was quoted at 6.25%, up from 4.5% Tuesday. Traders said Tuesday’s figure appeared to be caused by a technical correction rather than a change in Fed policy.
The dollar posted another uneven performance in a session dominated by technical factors and fears that a Persian Gulf victory may not lift the United States out of its economic slump.
The winding down of the Persian Gulf War was leading to a flurry of selling in a number of currencies by traders trying to unload speculative positions they took before the ground fighting began.
Traders said the U.S. currency was buoyed initially against the British pound after the Bank of England signaled the lowering of a key interest rate to 13% from 13.5%. It was that central bank’s second easing in two weeks.
In New York, the U.S. currency ended at 1.522 German marks, down from 1.523 Tuesday. The dollar also fell to 132.25 Japanese yen, down from 132.94.
Platinum futures surged strongly for the second consecutive day, reflecting the belief that the recession will be short-lived.
On the New York Mercantile Exchange, platinum settled $10.90 to $11.50 higher with the April contract at $395.90 an ounce. The metal is widely used in industry and thus should benefit from renewed growth.
At the Commodity Exchange in New York, gold futures settled $2.70 to $3.10 higher, with March at $361.70 an ounce. Silver was 0.5 cent to 0.7 cent higher, with March at $3.57 an ounce.
Market Roundup, D6