Dow Climbs 15.65 on Bond, Retail Reports : Market Overview
* Stocks rose in active trading, boosted by a successful auction of 30-year Treasury bonds and sharp rally in retail stocks.
* The Dow Jones industrial average rose 15.65 points to 3,054.11; small stocks hit new highs.
Stocks
The stocks rally was convincing, analysts said. Advancing issues outnumbered losers by more than 9 to 5 on the New York Stock Exchange. Big Board volume jumped to 206.85 million shares from Wednesday’s 167.44 million.
Investors were encouraged by healthy demand for the government’s 30-year bonds in the final day of the Treasury’s quarterly auction. Interest rates fell across the board one day after the Federal Reserve reduced its key short-term lending rate to the lowest level in 18 years.
In addition, better-than-expected October store sales at some retailers sparked strong buying of retail stocks.
The Dow index was helped by a powerful rally in shares of IBM, which jumped 3 1/4 to 99 7/8. Chairman John Akers said that the worst of the firm’s earnings woes were behind it and that he believed that the fourth quarter will be IBM’s strongest of the year.
“That’s the first time he’s had anything positive to say about the outlook this year,” said Robert Caputo, analyst at Swiss Bank.
Hugh Johnson, chief investment officer at First Albany, said: “IBM is a cyclical company whose fortunes are synonymous with the economy. It still seems to inspire the market.”
While blue chips got the limelight, smaller stocks continued to outpace them: The NASDAQ index of smaller issues jumped 5.80 points, or 1%, to a record close of 545.28, eclipsing its old high of 542.98 set Oct. 31.
The Dow remains slightly below its record of 3,077.15 on Oct. 18.
Among the market highlights:
* Retail stocks were the standouts, as October sales reports failed to show the disastrous plunge in consumer spending that some analysts had feared. Limited soared 2 3/4 to 26 1/2, Gap jumped 2 1/8 to 48 3/4, Best Buy rocketed 4 to 34 1/8, J. C. Penney rose 2 1/4 to 50 7/8, and ClothesTime was up 5/8 to 8 3/4.
* Optimism about lower interest rates sent insurance stocks soaring. They gain because lower rates lower their costs. Aetna rose 2 1/4 to 41 5/8, Chubb added 2 5/8 to 70 1/8, Mercury General was up 1 1/2 to 31 1/4, and AIG jumped 3 3/8 to 89 1/8.
* Utility stocks also gained from lower rates. American Electric Power rose 1 to 31 3/4, Houston Industries added 1 to 40 3/8, and Central & South West climbed 1 5/8 to 51 1/2.
* Some California S&L; stocks weakened further on worries about potential loan losses. Citadel Holding, parent of Fidelity Federal, sank 2 3/8 to 19 3/4; Downey Savings lost 1/2 to 13 5/8, and Coast Savings eased 3/8 to 6 5/8.
Meanwhile, banking giant Wells Fargo jumped 3 7/8 to 65 3/4 on the expectation that relaxed regulatory guidelines will help it avoid huge new loan writeoffs.
* McDonnell Douglas rose 1 1/8 to 70 1/4. As expected, the firm announced plans to split its Douglas Aircraft subsidiary into separate commercial and military units, a move analysts believe will help the company snare a partner to help develop a new wide-body jet.
* Big movers among Southland NASDAQ stocks included industrial-products firm Furon, up 1 1/8 to 13 7/8; drug firm Viratek, up 3 3/4 to 16; medical equipment firm Sunrise Medical, up 1 to 31 1/4, and HMO PacifiCare Health Systems, up 3 to 26.
* Computer disk-drive maker Seagate Technologies jumped 1 1/8 to 9 3/8 on rumors that Digital Equipment was mulling a takeover bid. Seagate said the rumor was false. Chatsworth-based Micropolis, another disk-drive maker, rose 7/8 to 9 1/4 on the news. Another rival, Quantum, rose 7/8 to 10 3/4.
* Biotech firm Synergen jumped 5 1/2 to 63 1/4. It said clinical trials of its Antril drug found that the drug significantly reduces mortality in patients with sepsis syndrome, a deadly bacterial infection.
Overseas, London shares were flat. The 100-share Financial Times-Stock Exchange index added 3.8 points to 2,538.0.
In Frankfurt, German shares inched up, with the DAX index adding 4.18 points to 1,578.40.
In Tokyo, the Nikkei average lost 303.44 points to 24,446.76.
Currency
The dollar was mixed against other currencies.
In New York, it closed at 1.641 German marks, up from Wednesday’s 1.637. The German central bank’s decision to leave interest rates unchanged helped the dollar. There had been rumors that it would raise rates to bolster the mark.
The dollar was marginally lower against the Japanese yen, falling to 129.86 from Wednesday’s 129.90.
Sales by a large speculator helped send the dollar down in morning trading, triggering other sales. But U.S. traders stepped in when the dollar hit a low of 1.625 marks and began buying.
Kevin Logan, economist with Swiss Bank, said there was a feeling that the dollar was reaching bottom after tumbling in recent weeks in response to declining U.S. interest rates.
Commodities
Prices of silver and platinum, two precious metals with industrial uses, fell sharply amid perceptions that this week’s cut in interest rates will spur neither a recovery nor a rise in inflation.
Silver for December sank 7 cents on New York’s Comex to $3.99 an ounce--the first close below $4 since Sept. 11. December gold dropped $1.10 to $354.70.
On the New York Merc, January platinum tumbled $6.20 to $358.80 an ounce.
Some analysts said the failure of precious metals to rally strongly Wednesday--when interest rates were cut--signaled a lack of confidence in the economy and set the stage for Thursday’s selloff.
Meanwhile, oil prices slipped on the New York Merc on rumors that Iraq would resume large-scale oil exports soon. Light, sweet crude for December fell 20 cents to $23.20 a barrel. December unleaded gasoline tumbled 0.92 cent to 65.36 cents a gallon.
