STOCKS : Trader Optimism Gives Dow Index 27.72 Boost
After a day of choppy trading, Wall Street stocks ended sharply higher Friday as investors bet that the economy will mend sooner than expected now that Gulf hostilities have halted.
The Dow Jones industrial average closed up 27.72 points at 2,909.90. For the week, the Dow was up 20.54 points.
In the broader market Friday, 953 issues advanced, 644 issues declined and 446 were unchanged in nationwide trading of New York Stock Exchange-listed stocks.
Big Board volume totaled 221.51 million shares, down slightly from Thursday’s 223.01 million.
Both the NYSE Composite index of all listed common stocks and the Standard & Poor’s index of 500 stocks hit record closing highs.
The NYSE Composite rose 1.70 points to 202.40. The S&P; 500 closed up 3.40 points at 370.47.
The average share on the New York Stock Exchange was up 29 cents.
Economics provided much of the impetus, particularly a report from the National Assn. of Purchasing Management.
The purchasing managers said their monthly index rose to 38.5% in February from 37.7% in January.
“The market turned with the purchasing managers’ report since it was up for the first time in months. We’re beginning to see some signs that the economy is not going to deteriorate further,” said Alan Newman of HD Brous & Co.
“With the end of the war, consumer confidence should pick up. Even I’m thinking of buying a car.”
Despite this, a separate report from the Commerce Department said that its index of leading economic indicators, the government’s chief forecasting gauge, declined 0.4% in January after a revised 0.1% fall in December.
Stocks also traded higher after President Bush said the allies and Iraqis will meet today to discuss cease-fire matters.
“There was nothing new in what he said, but it’s reassuring to hear him speak,” said Brett Discher of Dain Bosworth.
“People are cautiously putting money to work” in the stock market, he said. “When stocks start moving, people jump in. No one wants to be the first one, but no one wants to be the last one either.”
Although the market is elated by the halt in combat, some investors remain wary.
“The market has factored in some possibility that there could still be hostilities. Some of us won’t believe the war is over until the troops come home,” Newman said.
Among the market highlights:
* Wells Fargo and Security Pacific rose amid renewed speculation that the two bank holding companies are again discussing a merger, analysts said. Wells Fargo climbed 6 3/8 to 76 5/8, and Security Pacific rose 4 1/8 to 32.
* Laserscope plunged 2 3/4 to 17 3/4 on investor disappointment after the company said first-quarter results will come in below expectations, analysts said.
* Baker Hughes fell 7/8 to 29. The company said its stocks were downgraded by Paine Webber to “attractive” from “buy.”
* Ford added 5/8 to 33 1/4, and Chrysler slipped 1/8 to 14. Prudential Securities upgraded its ratings on both companies.
* Amgen, which has fluctuated widely on prospects for its new drugs, jumped 3 7/8 to 95 1/8.
German share prices dropped 1.6% to their lowest in more than two weeks on concern about the costs and financing of German unity. The 30-share DAX index fell 25.35 points to 1,516.74.
Stocks also fell sharply in Tokyo as the market searched for trading factors to replace the Gulf War. The 225-share Nikkei average dropped 527.65 points or 2% to 25,881.57.
Stocks finished higher on London’s Stock Exchange. The Financial Times 100-share index ended up 6 points at 2,386.9.
Credit
Government bond prices fell as the market anticipated economic improvement and the potential for sales of Treasury securities by Saudi Arabia and Kuwait to finance postwar rebuilding.
The Treasury’s bellwether 30-year bond fell 23/32 point, or $7.19 per $1,000 in face amount. Its yield, which rises when prices fall, rose to 8.28% from 8.20% late Thursday.
Kevin Flanagan, a money market economist at Dean Witter Reynolds Inc., said the bond market was responding to the belief “that the economy is going to rebound sooner rather than later, and with that goes future inflationary fears.”
Bond prices are especially sensitive to inflation, which erodes the value of such fixed-return securities.
Flanagan also said there was a belief that Saudi Arabia and Kuwait may sell some of their large holdings of U.S. government securities to help finance reconstruction efforts. The sales could temporarily depress bond prices.
The federal funds rate, the interest charged on overnight loans between banks, fell to 6.375% from 7% late Thursday.
Commodities
Aggressive demand for wheat futures sent prices sharply higher on the Chicago Board of Trade. Other grains and soybeans also advanced.
On other markets, livestock and meat futures were mixed, silver and platinum were higher while gold declined, and energy futures were mixed.
Weather concerns and hopes for improved export business dominated the wheat market, which saw prices advance nearly 17 cents a bushel during a two-day rally, bringing them to four-month highs.
Soybean traders were watching the weather in Brazil, the world’s No. 2 producer of the crop. An inch or more of rain late in the week brought some relief to a prolonged dry spell there.
Wheat settled 8 to 9.25 cents higher, with the contract for delivery in March at $2.69 a bushel; corn was 2.50 to 3.75 cents higher, with March at $2.44 a bushel; oats were 4.50 to 6 cents higher, with March at $1.1625 a bushel, and soybeans were 5.25 to 11 cents higher, with March at $5.8675 a bushel.
On the Commodity Exchange in New York, gold settled 40 to 50 cents lower, with March at $367 an ounce, and silver was 4.2 to 4.5 cents higher, with March at $3.773 an ounce.
On the New York Mercantile Exchange, platinum was 70 cents to $1 higher, with April at $406.40 an ounce.
Crude oil and its products were mostly higher on the New York Merc while natural gas posted losses.
Light sweet crude oil settled 46 cents higher at $19.38 a barrel.
Currency
The dollar strengthened against major foreign currencies on the belief that the U.S. economy may be on the verge of rebounding.
Traders found nuggets of optimism in the economic reports, which reinforced a perception that the recession will be shallow and brief.
The dollar finished London dealings at its highest level against the German mark and Japanese yen since around the time of the U.N. Security Council’s Jan. 15 deadline for Iraq to withdraw from Kuwait.
In New York, the dollar closed at 1.5385 German marks, up from 1.5243 marks at Thursday’s close. Against the Japanese yen, the dollar finished at 134.60 yen, up from 133.025 Thursday. The British pound fell to $1.8960 in New York from $1.9120 late Thursday.
Other late dollar rates in New York, compared to late Thursday’s prices, included Swiss francs, 1.3355, up from 1.3248; French francs, 5.2415, up from 5.1890; Italian lire, 1,150.50, up from 1,139.00, and Canadian dollars, 1.1521, up from 1.1498.
Market Roundup, D6
