STOCKS : Investors’ New Hopes Send Dow 31.08 Higher
Stocks posted a broad advance Tuesday as investors emerged from the sidelines despite a growing sense that the economic recovery may be flagging.
The Dow Jones industrial average jumped 31.08 points, or 1%, to 3,016.32. That put the index just a small gain away from its all-time high of 3,035.33 reached on June 3.
On the New York Stock Exchange, gaining issues beat losers by about 2 to 1. Volume came to a moderate 169.09 million shares as of 5 p.m. EDT, up from 136 million in the previous session.
Stock prices opened on a strong note on the heels of big gains in overseas markets. In London, equities inched up to another all-time high, while Japan’s market closed sharply higher overnight on sentiment that the worst of the securities scandal there may be over.
U.S. stocks managed to build steadily on their initial gains. “You might say the market accepted some of the positives it had been rejecting just a few days ago, namely strengthening overseas markets, the strong dollar and firm bonds,” said Robert Stovall of Stovall/21st Advisers.
On the economic front, the government reported a better-than-expected 7.4% jump in the sales of new homes during June.
But news that consumer confidence remains shaky put a damper on the economic outlook. Many experts now fear that the economy could be headed for a second recession by fall, unless consumers regain a positive outlook soon.
Wall Street appears convinced that even if the economy slows again, a potential accompanying drop in interest rates would bolster stocks--or at least enough of them.
Among market highlights:
* Within the Dow index, Boeing jumped 2 7/8 to 46 1/2 after reporting a 17% surge in quarterly profits Monday. Its showing helped lift other defense issues, including General Dynamics, up 1 5/8 to 44 5/8, and McDonnell Douglas, up 2 to 57.
* Drug stocks had another good day, as investors chased issues likely to report good earnings in any kind of economy. Lilly was up 1 1/4 at 74 7/8, Syntex gained 1 1/2 to 42 3/4, Merck jumped 2 5/8 to 127 3/8, and Amgen soared 4 1/4 to a new all-time high of 149.
* Oil stocks continued to rally. Chevron rose 1 1/8 to 72 1/2, Mobil added 1 to 67 1/4, and Halliburton gained 1 1/8 to 39 3/4.
* Retailers advanced, led by Dayton Hudson, up 2 3/8 to 69 1/8, and Nordstrom, up 1 3/4 to 45 3/4. Another big gainer was Anaheim-based Clothestime, up 3/4 to 7 3/8 after announcing new store openings.
* Most industrial issues lagged as economic worries solidified. GM fell 1/2 to 39 7/8, TRW lost 1/4 to 45 1/4, and Inland Steel slipped 1/8 to 22 7/8.
* Technology stocks were weak. El Segundo-based Computer Sciences, down 6 5/8 Monday, plunged another 4 1/2 to 57 as analysts cut earnings estimates. The company warned of flat near-term earnings.
* King World Productions dropped 2 1/2 to 24 7/8, after trading as low as 22 1/2 on heavy volume. There was no news.
In Tokyo, the Nikkei average rose 429.05 points, or 1.8%, to 23,872.63. London’s advance took the 100-share Financial Times index up 0.6 points to 2,595.6. In Frankfurt, the 30-share DAX index climbed 9.36 points to 1,614.93.
Credit
The waiting game continued in the bond market, with yields dropping slightly ahead of two imminent economic announcements.
The Treasury’s 30-year bond was up 3/16 point, or about $1.88 per $1,000. Its yield eased to 8.37% from 8.39% Monday.
Traders are waiting for the Treasury to announce today the size of next week’s auctions to refinance the government’s debt. Some analysts are concerned that a larger-than-expected supply would bury the market with new issues, driving down prices.
Also, close attention will be paid to Friday’s release of July unemployment data, and the chance that further weakness will spur the Federal Reserve to cut interest rates again.
The federal funds rate, the interest on overnight loans between banks, was unchanged at 5 3/4%.
Currency
The dollar rose on word of the 7.4% gain in new-home sales in June. The report bolstered perceptions that the recession is over and the economy is expanding, which would make the dollar appreciate.
The dollar edged up to 137.90 Japanese yen in New York from 137.85. It rose to 1.753 German marks from 1.747.
Commodities
Platinum became cheaper than gold as the Japanese sold heavily on a report that the Soviets are stepping up shipments of the metal.
Platinum futures settled $4.60 to $4.70 lower on the New York Mercantile Exchange, with the contract for delivery in October at $362.90 an ounce.
Gold futures ended $1 to $1.10 lower on New York’s Commodity Exchange, with the October contract at $366.10 an ounce. Silver futures settled 1.9 to 2.3 cents lower with August at $4.04.
Japanese investors sold platinum after a report that the Soviet Union had shipped 22 metric tons in the first six months of the year, compared to fewer than 2 metric tons during the same period a year ago.
James Steel, metals analyst with Refco Inc. in New York, said the Soviets have been selling platinum to compensate for a decline in energy exports.
Elsewhere, corn and soybean futures prices finished moderately lower on the Chicago Board of Trade amid profit taking prompted by a wetter weather forecast for the Midwest. Wheat futures were narrowly mixed.
Corn was 1 1/4 to 4 cents lower, with September at $2.53 1/2 a bushel; oats were 2 cents lower across the board, with September at $1.27 1/4 a bushel, and soybeans were 4 1/4 to 8 1/4 cents lower, with August at $5.75 1/4 a bushel. Wheat futures settled 1/4 cent lower to 1 cent higher, with September at $2.91 3/4 a bushel.
Light, sweet crude oil futures finished 7 cents to 25 cents higher, with September at $21.42 a barrel.
Market Roundup, D8
