Dow Surges 37.83 on Hopes for Cut in Interest Rates : Markets: The gain occurs on low NYSE trading volume of 126.67 million shares, because of the Columbus Day holiday. It was the slowest day since Sept. 4.
The stock market staged a solid rebound Monday from last week’s lows, bolstered by bargain hunting and renewed hopes of a cut in interest rates.
The Dow Jones industrials, off 64 points last week, rose 37.83 points to 3,174.41. Advancing issues outnumbered declines by 2 to 1 on the New York Stock Exchange.
But volume slipped to 126.67 million shares from 178.94 million Friday, as some Wall Streeters took off for Columbus Day. The government bond market was closed for the holiday, which also lent stability to stocks.
Share prices rose briskly at the opening and held on to their gains most of the session. Larry Wachtel, analyst for Prudential Securities Co., said Chicago stock-index futures rallied before Wall Street opened, and that bullish tone spilled over to stocks.
Much of the early buying was technical in nature, experts said, noting that the Dow had lost 146 points since Sept. 21. Some traders who had sold shares “short”--correctly betting on a decline--were buying to cover their positions and lock in profits, analysts said.
The market was also helped by weekend comments from Federal Reserve Chairman Alan Greenspan, who said that the presidential election wouldn’t alter the Fed’s money policy. That renewed hope of a near-term interest rate cut and helped fan buying enthusiasm.
“There is some feeling that there might be a unified rate cut this week” by the United States and major European countries, said Tom Gallagher, head trader at Oppenheimer & Co.
On Friday, stocks had plummeted to new lows for the year, with the Dow losing 39.45 points to 3,136.58. The drop came after the Financial Times quoted an unnamed senior Fed official as saying that sluggishness shown by U.S. economic data didn’t conclusively point to a slowdown. It was taken to mean that the Fed would not lower interest rates soon.
“Greenspan’s comments over the weekend renewed hope of a rate cut,” said analyst Robert Walberg at MMS International.
Meanwhile, Sunday’s debate between President Bush, Democrat Bill Clinton and independent Ross Perot Bush had little influence on the market, traders said.
“I really can’t link it to the debate,” Wachtel said of the market’s gains. Some dealers were concerned that a poor Bush performance would hurt stocks.
Among market highlights:
* Auto stocks again were in the spotlight. GM gained 1 5/8 to 30 after the firm reached agreement with the United Auto Workers on Friday to avert a strike at a key plant.
Also, a Barron’s magazine story was bullish on all three major U.S. auto makers. Ford gained 1 1/4 to 36 1/8, and Chrysler rose 3/4 to 22 7/8. Parts suppliers also rallied, including Goodyear, up 1 7/8 to 62, and Cooper Tire, up 1 1/8 to 28 1/8.
* Energy stocks rebounded from a recent selloff. Chevron gained 1 1/8 to 73 3/4, Halliburton jumped 1 5/8 to 32 1/4, Royald Dutch leaped 1 3/4 to 86 7/8, and Enron was up 5/8 to 47 1/2.
* Telephone stocks were sharply higher, apparently as investors hunted for high dividend yields. Nynex surged 2 to 84 3/8, Pacific Telesis rose 1 to 44 3/8, Southwestern Bell leaped 1 7/8 to 68 3/8, and Ameritech gained 1 3/8 to 67 3/8.
* Several strong earnings reports failed to thrill investors, puzzling some analysts. Computer chip giant Intel fell 5/8 to 65 7/8 after trading as low as 64 1/4, despite reporting earnings up 19% in the latest quarter. The firm also said its order bookings are “excellent.”
Video-game software maker Electronic Arts plunged 3 3/4 to 30 1/2 despite reporting quarterly earnings up 64%, ahead of expectations.
Meanwhile, Octel Communications slumped 2 1/8 to 15 3/4 after brokerage Hambrecht & Quist said the maker of voice-processing systems may have fallen short of analysts’ quarterly earnings estimates of 22 to 28 cents a share.
* International Game Technology, a slot machine maker, leaped 2 1/4 to 41 after an Oppenheimer & Co. analyst recommended the stock. But casino stocks in general were lower after a story in Barron’s said big expansion plans in Las Vegas will hurt casino earnings.
* Mail Boxes Etc. rose 1 to 16 1/4. There were rumors that Federal Express was accumulating a stake in the postal service-center operator, but FedEx denied them.
Overseas, Tokyo’s Nikkei average climbed 242.23 points to 17,302.01.
In London, the Financial Times 100 average jumped 16.0 points to 2,557.2. Frankfurt’s DAX average slipped 7.12 points to 1,432.54.
Currency
The dollar slipped against other currencies after Fed chief Alan Greenspan’s comments that election-year politics wouldn’t stand in the way of an interest rate cut if needed to help the economy.
In New York the dollar fell to 120.85 Japanese yen from 121.80 Friday. It slipped to 1.469 German marks from 1.487.
Commodities
Gold and silver futures sank on New York’s Comex as strength in the stock market drew assets away from precious metals.
Gold for current delivery fell $5.20 to $345.20 an ounce, while silver fell 2.6 cents to $3.75.
Lucille Palermo, analyst at Van Eck Associates, said the drop seemed to be based on a large amount of gold dumped from one source. She said there were reports the source was Middle Eastern.
Meanwhile, oil futures eased on the New York Merc after the weekend release of an American bomb-disposal expert seized late last week by Iraqi police. Light, sweet crude oil for November slipped 7 cents to $22.30 a barrel.
Credit
Treasury bond prices rose in overseas trading. The U.S. market was closed for Columbus Day.
The quoted price in London of the Treasury’s main 30-year bond gained 2/32 point, or 63 cents per $1,000 in face amount. Its yield was 7.51%, down from 7.52% Friday.
Government securities are traded on foreign financial markets, but there is little interest when U.S. market participants are away.
Market Roundup, D8
