Stocks End Month on Upbeat Note
Highlights of Friday’s market activity, compiled from Times staff and wire reports:
* Blue chip stocks closed higher in moderately heavy trading, closing out January on an upbeat note as investors surveyed fresh evidence of a strengthening economy. But cellular phone stocks were swept by turmoil over the technology’s potential role as a health hazard.
* The dollar rose sharply after a huge rise in U.S. durable goods orders bolstered hopes for the American economy.
* Treasury bond prices finished mostly higher in quiet trading, first dropping on news of the unexpectedly strong factory spending but later rallying on hints the government will cut its long-term debt.
Stocks
The Dow Jones industrial average rose 3.78 points to 3,310.03, adding a total of 53.22 points for the week. Gainers led decliners 1,002 to 809 on the New York Stock Exchange, where volume totaled 247 million versus 255.6 million on Thursday.
Reversing a sharp loss on Thursday, the NASDAQ composite index rose 1.67 to 696.34.
A 9.1% rise in durable goods orders in December, which far exceeded a forecast 1.6%, had little effect on stock prices. But analysts said the news underscored improvements in economic growth.
“Clearly, the economic backdrop is increasingly positive, with yesterday’s GDP (gross domestic product), and today’s astounding durable goods,” said David Bostian, chief economist at Herzog Heine Geduld.
Brokers say the stock market appears to already have taken a significant improvement in the economy into account with its rally in the fall and early winter.
With its rise this week, the Dow Jones industrials finished January 8.92 points higher than their 1992 year-end level. Other, broader market indexes also wound up on the plus side for January, having performed better than the Dow earlier in the month.
The indicators thus sent a positive signal to followers of the “January barometer,” which holds that the behavior of stocks in the first month sets the tone for the rest of the year.
The doctrine has many detractors, who say no such theory can be relied upon as a basis for investment decisions. But it remains widely discussed on the Street.
Renewed fears about possible health hazards from cellular telephones set off a flood of selling in the group. Analysts said the concerns notwithstanding, many of the stocks had gained smartly recently and were ripe for profit taking.
Among the market highlights:
* Cellular stocks taking a beating included Motorola, off 4 7/8 to 51; McCaw Cellular, down 3 3/8 to 32 1/2; LIN Broadcasting, declining 3 3/4 to 78 1/4; Contel Cellular, dropping 5/8 to 14 3/4, and Century Telephone Enterprises, falling 2 to 26 5/8.
* Scientific-Atlanta tumbled 4 5/8 to 24 1/4 after disappointing second-quarter results.
* Vans Inc. slumped 3 3/4 to 9 1/4. The Orange-based shoe manufacturer said it could post a third-quarter loss because of severe rains, a bad economy and an immigration raid.
* National Community soared 8 to 50 3/4. It agreed to be acquired by Bank of New York in a stock swap.
* Xerox jumped 3 3/8 to 85 3/4 after posting solid year-end 1992 operating results.
* American Re ranked among the volume leaders, jumping to 37 after an initial public offering at 31.
In London, the Financial Times index of 100 leading shares finished down 9.7 points to 2,807.2, but marking a rise of 26 points from last Friday. In Frankfurt, the 30-share DAX edged up 4.01 points to close at 1,571.85, down 15.79 on the week.
Tokyo stocks closed mixed as profit taking pulled down prices near the close. The 225-share Nikkei average was down 39.63 points, or 0.23%, to 17,023.78, with an estimated 320 million shares traded. Over the week, the index gained 686.97.
In Mexico City, stocks fell for the fourth straight session, registering their biggest weekly loss in six months on investor concerns about the Mexican economy and rising interest rates. The 40-share IPC index dropped 27.61 points to close at 1,653.22.
Currency
Traders and analysts were impressed with the broad-based pick-up in durable goods orders.
“The figures were so much above expectations the dollar found real support,” said Jack Griffin, corporate dealer at Fuji Bank in New York.
Foreign exchange dealers said the surprise figures jolted the market from its fixation on interest rates and turned attention to world growth prospects.
“The U.S. economy looks better than everyone else at this point,” said a British bank dealer in New York. He said the dollar’s resilience despite repeated tests of technical support levels helped set the stage for today’s rally.
The dollar’s strength drew attention away from recently volatile European currency markets and new pressure on Europe’s agreement to keep its currencies aligned. Heavy selling of Ireland’s punt this week forced the Irish government to push money market interest rates to 100% at one point, and Irish banks boosted their prime rates to 28%.
In New York, the dollar settled at 1.6112 marks in late afternoon trading, from 1.5860 marks late Thursday. It rose to 124.65 yen from 124.20 yen late Thursday. In New York, the pound inched higher to $1.4865, but ended well below Thursday’s $1.5170.
Other late dollar rates compared to Thursday quotes included 1.4883 Swiss francs, up 1.4620; 5.4495 French francs, up from 5.3670; 1,492 lira, up from 1,479, and 1.2678 Canadian dollars, down from 1.2698.
Other Markets
The price of the Treasury’s bellwether 30-year bond was up 1/8 point, or $1.25 per $1,000 in face amount, while its yield was unchanged from Thursday’s price of 7.19%.
Selling pressure was initially heavy, analysts said, after the release of the stronger than expected durable goods report. The bond market normally reacts unfavorably to signs of rapid economic growth, which is generally inflationary. Inflation erodes the value of fixed-income investments such as government securities.
However, investors returned to the market on comments by Deputy Treasury Secretary Roger Altman that the Clinton Administration is considering changing the government’s borrowing mix to cut long-term and increase short-term debt.
Yields on three-month Treasury bills rose to 2.95% as the discount jumped 4 basis points to 2.90%. Yields on six-month bills rose to 3.12% as the discount went 1 basis point higher to 3.04%. Yields on one-year bills rose to 3.32% as the discount gained 1 basis point to 3.21%.
The federal funds rate, the interest on overnight loans between banks, was 2 15/16%, down from 3% late Thursday.
After a sharp run-up the day before, prices for crude oil and refined products finished lower.
Light, sweet crude for delivery in March settled at $20.26 per barrel, down 15 cents, on the New York Mercantile Exchange. Crude rose 75 cents a barrel the day before, after the chairman of the Senate Energy Committee proposed an oil import fee.
Gold prices fell 30 cents on the Commodity Exchange, where bullion for current delivery settled at $330.20. A late quote from Republic National Bank said spot gold fell 50 cents to $329.85.
Market Roundup, D6
