STOCKS : Dow Soars 32.68, Ending 4-Day Slump
Renewed investor interest in technology and medical stocks helped pull Wall Street out of a four-day losing streak Wednesday.
The Dow Jones industrial average jumped 32.68 points to 2,955.20, a 1.1% gain. Among smaller issues, the NASDAQ composite index leaped 6.78 points to 468.18, a gain of 1.5%.
New York Stock Exchange volume was 176 million shares, compared to 176.4 million Tuesday. Advancing issues outnumbered declines by 3 to 2 in nationwide trading of NYSE-listed stocks, with 933 up, 633 down and 486 unchanged.
“We saw a return of leadership. The high techs were strong, and some of the medical stocks in the over-the-counter market picked up,” said Robert Walberg, analyst at MMS International. “Program trading kicked in when we went through 2,940 (on the Dow).”
Federal Reserve Board Chairman Alan Greenspan’s comment that there was room for lower interest rates and the release of the Fed’s “Beige Book” economic survey helped calm nerves about the economy, said Peter Davies of Nomura Securities.
The Beige Book report pointed to signs that the decline in the economy may be easing, although it still remains weak. The survey was in line with a growing belief that the economy may be heading out of recession, in part because of the brevity of the Gulf War.
Among the market highlights:
* Semiconductor stocks, led by Intel, rebounded from recent slides on news that the industry’s February order rate was strong. Intel added 2 3/8 to 47 5/8.
Among other chip stocks, Advanced Micro Devices rose 1/2 to 9 5/8, Motorola gained 1 1/2 to 61 3/4, Chips & Technologies advanced 1/4 to 10 1/2 and Cypress Semiconductor rose 1 1/4 to 18 1/2.
* Elsewhere in the technology group, many stocks that were sold off in recent days jumped sharply. IBM rose 2 1/8 to 129 1/8, Digital Equipment surged 3 1/2 to 79 7/8, Compaq rose 1 to 67 1/4, Hewlett-Packard gained 1 1/4 to 49 3/8 and Microsoft leaped 4 3/4 to 100 1/2.
* Among medical stocks, Genetics Institute rose 3 1/8 to 43. Analysts at Prudential Securities and Shearson Lehman repeated buy ratings on the biotech company. Amgen, Genetics Institute’s major rival, jumped 6 to 123 after Shearson repeated a buy recommendation.
Other rebounding medical stocks included U.S. Surgical, up 4 1/2 to 104 1/2; Warner Lambert, up 2 1/2 to 78 1/2, and U.S. Healthcare, up 4 to 43 3/8.
* General Dynamics rocketed 4 3/4 to 28 1/2 after Goldman Sachs recommended the stock, citing expected strength in the firm’s general-aviation business.
* L.A.-based Pacific Enterprises plunged 3 1/4 to 38 1/2 after a Wall Street Journal story suggested that the conglomerate might have to cut its dividend. The company affirmed the current dividend but said its dividend policy will be reviewed later in the year as management redirects its retailing and oil and gas businesses.
* McDonald’s, which announced a 91% fat-free hamburger called McLean Deluxe, rose 1 1/4 to 35 1/8. First Boston and Smith Barney made positive comments.
* Anaheim-based clothing chain Clothestime fell 1/8 to 4. Investors Jack Roth and Robert Recht said they lowered their stake in the firm to 4.95%, or 698,000 shares, after selling 177,000 shares between Jan. 21 and March 8.
Overseas, German stocks dropped sharply with the price of electronics giant Siemens. Frankfurt’s 30-share Dax average tumbled 29.42 points to 1,542.19.
Shares also fell on the London Stock Exchange. The Financial Times 100-share average closed down 6.6 points at 2,448.2.
The Tokyo Stock Exchange closed lower, with the key 225-share Nikkei average down 309.10 points to 26,418.32.
Credit
Bond prices climbed strongly on hopes for lower interest rates.
The Treasury’s bellwether 30-year bond rose 14/16 point, or $8.75 per $1,000 in face amount. Its yield plunged to 8.18% from 8.26% late Tuesday.
Auto sales for the first part of March--the first key economic statistic since the end of the Gulf War--were worse than expected, analysts said. The report showed that North American-made cars sold at an annual rate of 5.4 million units, down from the 6.3-million rate that many expected.
The report “certainly was not very encouraging at all for the turnaround of the economy,” said Paul Suckow, analyst at Oppenheimer Management.
While the Federal Reserve’s Beige Book report suggested that the economy’s slide was easing, bond traders chose to focus on the car sales report and on Fed Chairman Greenspan’s congressional testimony. He said interest rates could go even lower.
Bond traders welcomed Greenspan’s statement because many felt that last Friday’s Fed interest rate cut probably was the last for a while.
The Fed lowered the perceived target of the federal funds rate by a quarter point to 6% last Friday. The rate, the interest on overnight loans between banks, was 5.875% Wednesday, down from late Tuesday’s 5.938%.
Currency
The dollar finished mostly higher against major foreign currencies as traders reacted to a large overseas purchase, the specter of further central bank interventions and uneven economic news.
Traders said the dollar drifted higher in New York after reports that a large Japanese foreign exchange house bought several billion dollars, driving up the greenback’s value in Tokyo.
But the dollar’s upward move was stemmed when the Bank of Japan stepped in to counteract the big purchase by selling dollars, said Mike Casey, international economist for Maria Ramirez Capital Consultants.
In New York, the dollar closed at 1.573 German marks, up from Tuesday’s 1.570. It closed at 135.66 Japanese yen, down from Tuesday’s close of 135.84. The British pound fell to $1.861 from $1.862 late Tuesday.
The dollar has climbed about 10% since hitting a record low of 1.443 marks Feb. 11.
Commodities
Precious-metal futures prices surged on New York’s Commodity Exchange as the market viewed the latest economic news as a sign the recession is ending.
Silver and platinum prices were strong on the Comex from the start of trading due to buying in Europe and the Far East, said Jim Steel, an analyst with Refco Inc.
Steel said the market also had good feelings about comments made by Fed Chairman Greenspan.
Gold settled $1.80 to $2.10 higher, with the contract for delivery in April at $368.10 an ounce; silver was 10.2 to 10.7 cents higher, with March at $4.108 an ounce; platinum was $6.30 to $6.60 higher, with April at $411.50 an ounce.
Market Roundup, D8
