No Black Monday: Dow Advances 29.52 : Market Overview
Highlights of Monday’s market activity, compiled from Times staff and wire reports:
* The stock market brushed aside fears of another Black Monday, as the Dow Jones industrial average rebounded 29.52 points to 2,972.72 in heavy trading.
Still, losing stocks narrowly outpaced winners on major markets.
* Treasury bond yields inched up after an expected flight from stocks to bonds failed to materialize.
Stocks
Lessons learned from past crashes and word from Washington that a controversial credit card measure would likely die helped the Dow recover about a quarter of Friday’s 120.31-point plunge.
The market opened higher, then wavered before an afternoon buying surge took the Dow and other indexes convincingly higher.
The NASDAQ composite index of smaller stocks, which had tumbled 4.2% Friday, rose 0.7% Monday, gaining 3.44 points to 534.73.
Monday’s buying was concentrated in the relatively few classic growth stocks that have surged for much of 1991. Overall, losers still outnumbered winners by 10 to 7 on the NYSE and by 10 to 8 on the NASDAQ market.
Trading volume was heavy but by no means record-setting. Big Board volume totaled 242 million shares versus Friday’s 239 million.
Among the market highlights:
* Stocks of some credit card issuers and servicers rebounded as President Bush all but threatened a veto of a Senate measure to cap card rates. Advanta jumped 4 1/8 to 29 3/4, and Household International gained 7/8 to 44 7/8.
* Drug stocks led the rise in classic growth stocks. Merck soared 4 1/8 to 141 1/8, Johnson & Johnson gained 2 1/2 to 96 3/4, and Bristol-Myers rose 1 1/4 to 82 1/4.
* Food companies, another traditional growth group, also gained. Quaker Oats surged 2 3/4 to 67, General Mills rose 1 7/8 to 67 3/8, Coca-Cola jumped 2 1/4 to 67 and, PepsiCo added 1 3/8 to 29 7/8.
* Bargain hunting also was evident in the retail group. Gap soared 3 5/8 to 51 7/8, Home Depot rose 2 1/4 to 60, Nordstrom gained 2 to 36, and Toys R Us rocketed 1 5/8 to 28 5/8.
On the downside, American Stores, which owns Lucky supermarkets, plunged 4 7/8 to 31 1/8. It forecast flat quarterly earnings. It blamed the weak economy.
* A major surprise was a rally in biotech stocks--which had led Friday’s market plunge. Many analysts had expected the stocks to fall even lower, but buyers jumped in. Amgen soared 3 to 55, Immune Response was up 2 1/2 to 37 1/4, Immunex jumped 3 5/8 to 51 5/8, and Genzyme gained 2 1/2 to 47 1/4.
* The market’s weakness was concentrated in industrial and transportation issues, which would be most affected by another recession. Georgia-Pacific fell 1 1/4 to 48 1/2, Eaton lost 1 3/8 to 59 3/4, Chrysler eased 3/8 to 12, AMR (American Airlines) slid 1 1/4 to 59 1/8, and Conrail fell 1 1/8 to 75 3/4.
Overseas, European markets followed Wall Street’s Friday plunge, though the losses were less severe than the Dow’s 3.9% drop: London’s Financial Times 100 index lost 43.7 points, or 1.7%, to 2,502.9; in Frankfurt, the DAX average fell 17.44 points, or 1.1%, to 1,611.93.
In Tokyo, the Nikkei average fell 699.06 points, or 2.9%, on Monday. But in afternoon trading today, the Nikkei was up 122.20 points to 23,522.32. Hong Kong also rebounded: It was up 58.68 points to 4,256.89 in afternoon trading today after a 71-point loss Monday.
Credit
Bond yields edged up as an expected buying rush never arrived.
The price of the Treasury’s 30-year bond fell 15/32 point, or $4.69 per $1,000 in face amount. Its yield rose to 7.84% from 7.80% Friday.
After stocks plunged Friday, many bond investors gambled that there would be a flight to bonds Monday. But the stock market stabilized, leaving bonds flat.
The federal funds rate, the rate on overnight loans between banks, fell to 4.75% from 4.875% Friday.
Currency
The dollar was mixed against major foreign currencies.
Robert Ryan, trader at Bank of New York, said traders had anticipated a large decline in the dollar if stock prices slid. But the rebound in stocks aided the dollar.
It closed in New York at 129.48 Japanese yen, up from 129.40 Friday, though it eased to 1.611 German marks from Friday’s 1.619.
Speculation about a rise in German interest rates--which would draw investors to the currency--boosted the mark.
Commodities
Soybean futures prices surged, leading most grain markets higher, amid revived hopes for a Soviet food-aid package.
The January soybean contract jumped 13 1/2 cents to $5.68 a bushel, erasing Friday’s 10-cent loss.
Crop markets opened mostly lower, but turned higher after White House spokesman Marlin Fitzwater said the Bush Administration would decide “relatively soon” how much food aid to give the Soviet Union.
Elsewhere, light, sweet crude oil for December fell 39 cents to $22.40 a barrel on the New York Merc as worries about Russian oil export cuts eased.
On New York’s Comex, metals were flat. Gold for December rose $1.40 to $361.50 an ounce; December silver was unchanged at $4.03.
Market Roundup, D14
