Dow Up 17; NASDAQ at New High : Market Overview
* Stocks staged their traditional pre-Thanksgiving Day rally, helped by spillover buying from Tuesday and reports pointing to a strengthening economy.
The Dow Jones industrials rose 17.56 points to 3,266.26, while the NASDAQ index of smaller stocks again hit a record.
* Treasury bond yields inched up in abbreviated pre-holiday trading, though the market showed remarkable restraint given the good economic news.
Stocks
Investors appeared impressed by reports showing that the economy posted its strongest quarterly growth in nearly four years.
What’s more, the number of Americans applying for first-time unemployment benefits was reported to have fallen by 12,000 in the second week of November.
“The news was very good,” said analyst Barry Berman at Robert W. Baird & Co. That pumped up industrial stocks that would benefit from a stronger economy.
On the New York Stock Exchange, advancing issues led decliners 1,046 to 751 on volume of 207.7 million shares, down from Tuesday’s 247.7 million.
As on Tuesday, broader indexes such as the Standard & Poor’s 500, the NYSE composite and the NASDAQ composite of smaller stocks all hit record highs. All three advanced 0.4% on the day.
The Dow, despite a slightly bigger percentage gain Wednesday, remains well below its all-time high of 3,413.21 set last June 1.
The Dow traditionally gains on the days before and after Thanksgiving: Prior to 1987, the index had put together a string of 21 straight such gains, according to market historian Yale Hirsch of the Hirsch Organization.
But “in recent years, we’ve had a spate of anticipators, who begin jumping in” earlier, Hirsch added. On Tuesday the Dow jumped 25.66.
The stock market is closed today for Thanksgiving. It will reopen Friday for a shortened session, closing at 2 p.m. EST.
Many analysts said investors continue to focus on smaller stocks, which have been leading the market since late September. While there is concern that the small-stock market is becoming too speculative, analysts note that investors believe smaller firms will benefit most under the domestic-economy focus of President-elect Bill Clinton.
“Small stocks are still cheap relative to larger stocks,” argued analyst Hugh Johnson of First Albany Corp. What’s more, “small companies with niches can preserve their earnings” growth better in an iffy economy, he said.
Among the market highlights:
* Industrial stocks leading the market higher included Illinois Tool Works, up 3 3/4 to 64; Phelps Dodge, up 2 1/2 to 45 3/8; Ford Motor, up 1 1/2 to 41; Cummins Engine, up 1 3/4 to 74 1/4, and Trinova, up 3/4 to 21 5/8.
* Transport stocks, also sensitive to the economy, were strong. Roadway gained 2 to 69 1/4, Union Pacific rose 1 1/8 to 59 3/8, and Consolidated Freight was up 1 1/8 to 17 1/2.
* Some retail stocks continued to advance on hopes for improved Christmas sales. Dayton Hudson jumped 3 to 77 1/2, May Department Stores added 1 1/8 to 73 3/8, Circuit City gained 1 7/8 to 46 1/2, and Tandy leaped 1 7/8 to 29 5/8.
* BankAmerica surged 2 3/8 to 45 1/4. Investors were cheered by its plan to close 450 branches. Also, it was among bank stocks recommended by Donaldson, Lufkin & Jenrette.
* Berlitz International, the language-instruction firm, jumped 3 5/8 to 20 7/8 on hopes that its merger with Fukutake Publishing will be completed. The deal had been foundering.
* NASDAQ stocks leading that market higher included security firm Pinkerton’s, up 1 3/8 to 19 3/8; Ben & Jerry’s Ice Cream, up 2 1/4 to 31 1/8, and casual shoe maker Vans, up 1 1/4 to 14.
* On the downside, Syntex dropped 1 to 23 5/8. The drug company reported a $6.1-million loss for the first fiscal quarter ended Oct. 31, reflecting a restructuring charge and accounting changes for income taxes and post-retirement health care benefits.
Elsewhere, Comptronix plunged 15 7/8 to 6 1/8 after suspending three of its executives, including its chairman and president, on grounds that the three improperly overstated the firm’s finances.
Overseas, London’s Financial Times 100 index sank 17.5 points to 2,709.6. In Frankfurt, the DAX index climbed 7.44 points to 1,517.72.
Tokyo stocks ended higher for the fifth day in a row, the longest consecutive rise this year, on renewed optimism that the long bear market is ending. The Nikkei average rose 205.92 points, or 1.2%, to 17,302.01.
Credit
Bond yields rose slightly. But traders were surprised the rise wasn’t greater, considering the positive economic news.
The yield on the Treasury’s 30-year bond edged up to 7.54% from 7.53% Tuesday.
Shorter-term yields were generally up more: The discount rate on one-year Treasury bills jumped to 3.59% from 3.52% Tuesday.
The bond market closed at 1 p.m. East Coast time for Thanksgiving. Trading was light.
News that is favorable for the economy--such as Wednesday’s large reported rise in third-quarter gross domestic product--typically is interpreted negatively in the bond market, because an expanding economy often leads to more demand for money and thus higher interest rates.
But some analysts suggested Wednesday that bond investors’ logic is changing: More now are thinking that signs of an improving economy will reduce the pressure on President-elect Clinton to boost federal spending to help the economy. And if spending is held in check, federal borrowing needs could remain level or even fall--which could held ease upward pressure on interest rates.
The federal funds rate, the interest on overnight loans between banks, was 3 1/4%, up from 2 5/8% Tuesday.
Currency
The dollar got only a short-lived lift from news that weekly U.S. jobless claims fell more than expected and that third-quarter U.S. growth was revised upward.
“Positive data has been viewed as neutral,” said Mike Faust, a currency analyst at MMS International. “Clearly the market had reason to buy dollars today, but didn’t much.”
In New York, the dollar ended at 1.588 German marks, down from 1.594 Tuesday. It eased to 123.75 Japanese yen from 123.85.
Commodities
An early season High Plains snowstorm that dumped more than a foot of snow on the nation’s key cattle-raising region drove up cattle prices on the Chicago Merc.
Elsewhere, on the New York Comex, near-term gold futures ended down 80 cents at $333.50 an ounce. Silver was basically flat at $3.75.
Light, sweet crude oil edged up 5 cents to $20.27 a barrel on the New York Merc.
Market Roundup, D6
