MARKETS: Dow Up 19.90 : Dow Up 19.90 on Earnings Boost
Market Overview
Highlights of Thursday’s market activity, compiled from Times staff and wire reports:
* Stocks lifted from the gloom of Wednesday’s decline, helped by strong earnings reports from some bellwether companies such as Coca-Cola and Boeing.
The Dow Jones industrials rose 19.90 points to 3,244.86.
* Bond yields inched higher in confused trading, while gold and silver prices dropped sharply.
Stocks
The market bounced back convincingly from Wednesday’s 47-point Dow drop, analysts said.
Wednesday’s decline was sparked by Federal Reserve Chairman Alan Greenspan’s suggestion that no new interest cuts were in the offing.
Though the market has derived most of its strength over the past year from falling interest rates, analysts note that when economic recoveries begin, stocks usually respond more to corporate earnings trends than to interest rates.
And while an economic recovery isn’t assured, more investors appear to be taking heart from the President Bush’s proposals this week to spur new growth.
“We’re getting closer to the day when the market will not be driven by falling interest rates, but by rising earnings,” said one investment strategist.
Indeed, Thursday’s gains were partly fueled by strong fourth-quarter earnings reports from Coca-Cola and Boeing. Earlier this week, Walt Disney and Procter & Gamble also posted good results.
In the broad market, advancing issues topped losers by about 11 to 10 on the New York Stock Exchange, where trading totaled 195.09 million shares, down from Wednesday’s 249.00 million.
Investors looked beyond Thursday’s Labor Department report that initial claims for state unemployment insurance rose 24,000 to 464,000 in the week ended Jan. 18. Also, the Commerce Department said new factory orders for durable goods dropped 5% in December.
Many investors remain convinced that a recovery is certain as 1992 progresses.
Among Thursday’s highlights:
* Coca-Cola rocketed 5 5/8 to 77 1/8 after posting a 23% rise in fourth-quarter earnings. Coke also plans a two-for-one stock split. Rival Pepsico gained 1 1/8 to 33 7/8.
* Boeing jumped 2 1/8 to 52 3/4 after falling 3 on Wednesday. Several analysts repeated buy ratings and raised their earnings estimates after the jet maker reported a 27% rise in fourth-quarter results.
Boeing stock had tumbled on Wednesday when reports first surfaced that UAL, parent of United Airlines, might cut back jet orders. UAL said Thursday that it plans spending cutbacks, but didn’t elaborate. UAL stock rose 5 1/8 to 144 1/2.
* Other strong Dow stocks included McDonald’s, up 2 to 44 1/4 on its quarterly earnings report, and drug giant Merck, up 2 7/8 to 155 1/4.
* Thursday’s action wasn’t just in the consumer growth stocks. Many defense stocks rebounded after falling early in the week on concerns about Pentagon spending cuts. Lockheed jumped 1 1/2 to 41 1/2 after Kidder Peabody said the stock could rise to 50 by summer, based on strong earnings expectations despite defense cuts.
Also gaining were Martin Marietta, up 1 1/8 to 52 1/8; E-Systems, up 1 5/8 to 33 1/8, and General Dynamics, up 1 3/8 to 58.
* Xerox soared 4 3/8 to 74 7/8 after fourth-quarter earnings came in better than expected.
* Athletic shoe stocks soared, helped by Reebok’s earnings report. Reebok rose 1 7/8 to 32 3/4, Nike jumped 3 3/8 to 74 1/4, and L. A. Gear gained 1 1/2 to 16 5/8.
* Infinity Broadcasting, owner of many major radio stations, went public at 17 1/2 and closed at 18.
Overseas, London’s Financial Times 100-share average rose 4.3 points to 2,550.8. Frankfurt’s DAX average gained 8.51 points to close at 1,680.91.
In Tokyo, stocks also gained. The 225-share Nikkei average ended up 195.41 points at 21,557.67.
Credit
Bond traders spent most of the day digesting suggestions from Fed Chairman Greenspan that interest rates may not go lower. Bond yields have been on the rise in recent weeks, seemingly anticipating Greenspan’s comments.
The Treasury’s 30-year bond was down 11/32 point, or $3.44 cents per $1,000 price. Its yield inched up to 7.78% from 7.75% Wednesday.
There is growing concern about the government’s large bond sale planned for February, which could force rates even higher temporarily.
The federal funds rate, the rate on overnight loans between banks, rose to 4%, up from 3.865% Wednesday.
Currency
The dollar seesawed in hectic trading, falling first on weak U.S. economic statistics and finishing mostly higher.
In New York, the dollar rose to 1.616 German marks from 1.602 Wednesday. It fetched 125.70 Japanese yen, up from 125.65.
Commodities
Precious metals plunged on New York’s Comex as investors doubted that any economic recovery will boost demand for the metals in the short run.
Near-term gold fell $2.70 to $353.40 an ounce; silver tumbled 10.3 cents to $4.13.
Oil futures were mixed on the New York Merc, with light, sweet crude for March settling 5 cents higher at $18.94 a barrel.
