Dow Up 22; Dollar Gains Overseas : Market Overview
Stocks followed through on last week’s rally with a convincing advance amid more signs that the economy is on track. Blue chips continued to outpace smaller stocks.
* The dollar surged anew, benefiting from turmoil among European currencies and more favorable news about the U.S. economy.
* Treasury bond yields closed slightly higher, pressured by more signs of economic revival.
Stocks
The market drew renewed strength from expectations of a strengthening economy, and the optimism helped blue chip stocks in particular.
The Dow Jones industrials, up 53.22 points last week, rose another 22.15 points to 3,332.18.
Since October, the Dow has mostly lagged the NASDAQ market of smaller stocks. But the NASDAQ market was hit hard by profit taking last Wednesday and Thursday, and some of the cash leaving that market has apparently been funneled into blue chips.
The shift in market leadership was apparent Monday: Winners topped losers by 12 to 7 on the New York Stock Exchange, but the ratio was only 11 to 9 on NASDAQ, though the composite index added 5.43 points to 701.77.
Big Board volume came to 238.57 million shares, down from Friday’s 247.20 million.
The day’s most important economic news came from the National Assn. of Purchasing Management, which said the manufacturing sector expanded in January for the fourth straight month. The growth came despite high-profile layoffs and cutbacks announced by some big companies.
Separately, the government said construction spending was unchanged in December, which left annual outlays up 6.2%, the largest increase in six years.
Also, Standard & Poor’s Corp. had good news on the dividend front: The number of companies raising cash dividends in January was 146, up 18% from a year earlier. That is an indication of corporate directors’ optimism about future profit.
On a lighter note, analysts noted that the “Super Bowl barometer” was bullish: Historically, a win by the National Football Conference team has meant stocks rise for the year. The indicator has been 88% accurate in 26 years.
Among the market highlights:
* Energy stocks paced the advance, rising further in the wake of Clinton Administration talk of fees on imported oil. Chevron rose 1 1/8 to 73 7/8, Arco added 1 1/4 to 118 1/4, Halliburton gained 1 to 30 1/8, USX-Marathon was up 1 1/8 to 17 7/8, and Enron Corp. jumped 1 3/8 to 50 3/8.
* Brokerage and other financial services stocks soared on optimism that the bull market in stocks and bonds will continue. Merrill Lynch climbed 3 3/8 to 68 3/8, PaineWebber rose 1 7/8 to 27 1/4, Morgan Stanley gained 2 3/8 to 59, and Charles Schwab leaped 2 1/2 to 32 3/4.
* Among blue chips, American Express gained 1 3/8 to 24 5/8 after the weekend news that James D. Robinson III had resigned as chairman after a revolt by shareholders.
Other beleaguered blue chips rising Monday included IBM, up 1 1/8 to 52 5/8; Sears, up 5/8 to 49 3/4; GM, up 3/8 to 38 1/8, and Boeing, up 3/4 to 36.
* Some technology issues rebounded from last week’s selloff. Motorola, which had been hammered last week on fears that cellular phones pose health hazards, gained 2 3/4 to 53 3/4.
Also, McCaw Cellular rose 7/8 to 33 3/8, LIN Broadcasting added 2 3/8 to 80 5/8, and Cellular Inc. inched up 1/8 to 13 1/8.
Among other tech issues, Intel jumped 4 1/2 to 111 1/4, Apple rose 1 3/4 to 61 1/4, Microsoft added 1 to 87 1/2, Compaq leaped 2 3/8 to 53 1/2, Texas Instruments zoomed 2 3/8 to 56 3/8, and Cabletron Systems gained 2 5/8 to 89.
* Leslie Fay tumbled 4 5/8 to 7 3/8. The apparel maker said it is looking into alleged accounting irregularities that could result in a restatement of its 1991 earnings and the elimination of any ’92 profit.
* Telmex added 1 to 53 3/8. The company said operating income rose 12.4% last year, after adjusting for inflation. The firm also said it raised the total number of lines in service in Mexico 12% last year.
Overseas, London stocks surged on talk of another round of interest-rate cuts. The Financial Times 100-share average soared 44.4 points to 2,851.6.
In Frankfurt, the DAX average rose 13.31 points to 1,585.16.
In Tokyo, the Nikkei average closed at its day’s high, up 109.86 points at 17,133.64.
Currency
The dollar jumped again, as traders reacted to positive news on the U.S. economy and more volatility among European currencies.
The dollar soared to 1.636 German marks in New York, up from 1.611 Friday. It also rose to 125.05 Japanese yen from 124.65 yen.
It took just $1.460 to buy a British pound Monday, down from Friday’s $1.487.
Over the weekend, Ireland devalued the punt, making it the fifth European Community currency to either drop out from or be devalued in the EC’s supposedly currency-stabilizing grid.
As rival currencies are devalued, traders’ search for a strong currency is inevitably leading back to the dollar, analysts say. Also, healthy signs from the U.S. economy suggest that the dollar could strengthen further in 1993, which lends more urgency to traders’ desire to buy the dollar now.
Other Markets
The bond market rally stalled after the purchasing managers report suggested new economic strength.
Still, the rise in rates Monday was small. Many bond traders continue to bet that the economic recovery will be modest and thus won’t mean strong upward pressure on interest rates.
The yield on the Treasury’s main 30-year bond yield edged up to 7.20% from 7.19% Friday.
Elsewhere, crude oil rose 5 cents to $20.31 a barrel in cautious trading on the New York Merc.
Gold rose 10 cents to $330.30 an ounce on New York’s Commodity Exchange. March silver rose 1.5 cents to $3.68.
Market Roundup, D8
