Dow Up 25; NASDAQ Hits Record : Market Overview
* Stocks closed with large gains, bolstered by positive economic news and a jump in the broad market to record highs.
* Treasury rates dipped as traders shrugged off economic news that normally would have pushed interest rates up.
Stocks
Stock prices opened mixed and remained uncommitted after the release of a government report showing orders to U.S. factories for durable goods shot up a surprising 3.9% in October. The rise was much larger than economists expected.
But stocks moved decisively higher after the Conference Board reported consumer confidence in the economy increased this month for the first time since June.
The Dow Jones average jumped 25.66 points to close at 3,248.70. The index had been up about 41 points before computer-triggered selling kicked in during the final hour of trading.
In the broader market, advancing issues outnumbered declining ones by about 11 to 7 on the New York Stock Exchange.
Big Board volume rose to 247.70 million shares, up from Monday’s 192.53 million.
The NASDAQ index was up 7.10 points at 645.94, eclipsing the record closing high of 644.92 reached on Feb. 12. The NYSE composite and S&P; 500 indexes also set new highs.
While there has been a buildup of bullishness among small-company stocks of late, the NASDAQ index’s ability to hit a new high is confirmation of a positive trend, analysts said.
“Small stocks tend to beat big stocks in the early stages of a recovery,” said Steven Resnick, senior investment strategist at Cowen & Co.
He noted that small companies are also generally less reliant on foreign business than are larger firms, a factor that should further help secondary shares during the slump abroad.
Traders said the market was also benefiting from the wave of positive economic news.
Noting that broader market measures have been gaining in the last few weeks, Gene Jay Seagle of Gruntal & Co. said: “The broad market has been recognizing economic improvement ahead.”
Some of the advance was probably linked to year-end book squaring and to the Thanksgiving holiday on Thursday, analysts said.
Among the market highlights:
* Westinghouse Electric topped the Big Board’s most-active list, losing 1 1/8 to 11 as investors reacted to the company’s major restructuring announced on Monday.
* Among stronger technology issues, Microsoft rebounded 3 to 91 1/2 after losing 7 points on Monday on a Goldman Sachs estimate cut. Goldman on Tuesday said it is likely to revise its estimates on the company upward.
* International Business Machines rose 1 3/4 to 65, Compaq Computer was up 2 1/8 to 40 5/8, Dell Computer gained 2 1/8 to 35 1/2, Borland International rose 1 to 23 1/4, and Seagate Technology rose 3/4 to 19.
* System Software gained 3 3/4 to 35. Some analysts raised their earnings and revenue estimates on the company.
* Many leading retail stocks hit new highs for the 52-week period, including: J.C. Penney, which jumped 2 1/4 to 80; Wal Mart rose 1/2 to 62 7/8; Woolworth gained 3/4 to 34 3/8; May Department Stores rose 1 1/4 to 72 1/4; Neiman Marcus added 1 7/8 to 15 5/8, and electronics retailer Circuit City rose 1 3/4 to 44 5/8. Elsewhere, Sears rose 3/4 to 42 5/8, and Federated Department Stores gained 5/8 to 18 3/4.
Overseas, Frankfurt’s 30-share DAX average closed down 20.61 points at 1,510.28. In Tokyo, the 225-share Nikkei average finished up 62.49 points at 17,096.09. On the London stock exchange, the Financial Times 100-share average ended 4.2 points higher at 2,727.1.
Credit
The yield on the Treasury’s key 30-year bond fell to 7.53% from 7.54% late Monday, while its price, which moves inversely to the yield, gained 1/8 point, or $1.25 per $1,000 in face amount.
Short- and intermediate-term maturities posted larger gains. Trading was light.
The market’s positive tone contributed to a strong response to the auction of $10.75 billion in five-year notes by the Treasury. Bids at the auction totaled $27.1 billion.
Yields on the notes rose to the highest level since June. The high yield was 6.07%, up from 5.84% at the last auction on Oct. 28.
Bond prices initially fell after the government released its durable goods report. But prices rose heading into the auction as traders ignored a survey showing that consumer confidence was higher in November. Positive economic news generally pushes down bond prices.
The federal funds rate, the interest on overnight loans between banks, was quoted at 2.625%, down from 3% late Monday.
Currency
Despite the positive economic news, the dollar ended lower, weakened by foreign-exchange dealers who sold the currency to capture profits from its recent strength.
Money traders said the dollar’s weakness partly reflected some easing of anxiety over a new monetary crisis in Europe. Spain, Ireland and Norway raised interest rates Monday to defend the value of their currencies. Over the weekend, the Spanish and Portuguese currencies were devalued.
The dollar had benefited from the uncertainty because investors bought it as a safe haven, increasing the U.S. currency’s value.
In New York, the dollar closed at 123.85 Japanese yen and 1.595 German marks, down from 124.05 yen and 1.597 marks respectively on Monday.
Commodities
Orange juice futures prices soared on New York’s Coffee, Sugar & Cocoa Exchange as speculators betting on a Florida freeze won a tug-of-war with other traders gambling on abundant supplies.
On other commodity markets, grains and soybean ended mixed; energy futures were mixed; livestock and meat futures were mixed, and precious metals were little changed in dull trading.
Frozen concentrated orange juice for January delivery rocketed 7.3 cents to $1.021 a pound. All other contract months rose their permitted daily limit of 5 cents.
The move marked orange juice’s first foray above $1 since Oct. 8. Prices tumbled on Oct. 9 and have been trading at 6 1/2-year lows in response to a government forecast for a 33% increase in Florida orange production this season to 186 million 90-pound boxes.
Elsewhere, light, sweet crude oil rose 2 cents to $20.22 a barrel in cautious trading on the New York Mercantile Exchange ahead of an OPEC meeting scheduled to begin today in Vienna.
On New York’s Commodity Exchange, gold slipped 10 cents to $334.30 an ounce, and silver was unchanged at $3.743 an ounce.
