Bargains Boost Dow 33 Points : Wall Street: Investors seek out battered health care and tobacco stocks. Bond yields and the dollar also rise.
The stock market moved broadly higher Wednesday, buoyed by investors looking for bargains amid battered health care and tobacco stocks, as well as by low bond yields.
And a solid government durable goods report brought good news to the manufacturing sector, further supporting stocks.
The Dow Jones average of 30 industrials closed up 33.23 points at 3,356.50.
Advancing issues outnumbered declines by about 7 to 4 on the New York Stock Exchange.
Big Board volume totaled 316.75 million shares, down from Tuesday’s 329.06 million.
“It’s a bounce back in all the oversold groups,” said Tony Dwyer, chief market strategist at Sherwood Securities. “Growth stocks are having a nice little snap back.”
Philip Morris and RJR Nabisco were stronger, shaking off several days of losses based on concern over possible excise taxes.
Auto stocks, which were caught up in the recent cyclical stock selloff, all ended on the upside. Cyclical stocks are those that traditionally rise at the start of an economic recovery.
The NASDAQ composite index was up sharply, rising 11.06 to 662.46, with investors looking for bargains among its depressed stocks.
The index plunged 57 points between Feb. 5 and Tuesday on concerns that President Clinton’s economic plan, particularly the higher taxes, would hit small companies the hardest.
Among the market highlights:
* Among the health care group’s gainers, U.S. Healthcare jumped 4 3/8 to 44 1/2, Pacificare Class A shot up 6 to 34 3/4, Value Health advanced 1 1/4 to 28, and United Health rose 4 5/8 to 46 7/8.
* Compaq Computer sank 2 3/8 to 45 after Goldman Sachs removed it from its buy list.
* Chrysler gained 2 5/8 to 38 1/2. S.G. Warburg upgraded its rating on the car maker.
* Among drug stocks, Merck rose 7/8 to 38 1/2, Johnson & Johnson added 2 1/4 to 42 3/8, Abbott Labs gained 1 3/4 to 26, and Bristol Myers climbed 3/4 to 57 3/8.
* Lincare Holdings rose 3 to 24. Healthcare Compare jumped 3 to 18 3/4 after Bear Stearns upgraded its rating.
* Anthem Electronics sank 1 7/8 to 37 1/4. It said first-quarter sales and earnings per share should be below fourth-quarter levels.
* Philip Morris rose 2 5/8 to 66 1/4 and RJR Nabisco rose 5/8 to 8 3/8, both after dropping for two days on fears that the government will impose an excise tax on cigarettes and alcohol to pay for health care.
* Deere & Co. was up 2 1/2 at 50 3/4 after positive comments from Lehman Bros. analysts.
* On the NASDAQ market, Advanta, the issuer of credit cards, rose 5 3/8 to 34 3/8 after a Treasury official denied rumors of any cap on credit interest rates.
* Among other actively traded NASDAQ stocks, Dell Computer sank 6 1/8 to 30 1/8 after withdrawing a 4-million share offering. Goldman Sachs, lead underwriter of the offer, took Dell off its buy list.
Overseas, shares ended near their session lows in Frankfurt with the 30-share DAX average closing 17.34 points lower at 1,644.24. Prices also fell in Tokyo, with the 225-share Nikkei average shedding 64.21 points to close at 16,798.94. On the London stock exchange, the key Financial Times 100-share average lost 1.0 point to finish the day at 2,815.0.
Credit
Treasury bond yields rose as a poor auction of five-year notes helped drag the market down.
The yield on the Treasury’s main 30-year bond rose to 6.88%, sending the price down 3/4 point, or $7.50 per $1,000 in face amount.
On Tuesday, the bond’s price soared 1 13/32 point as its yield, a key indicator of long-term interest rates, plunged to an all-time low of 6.82%. Bond prices and yields move in opposite directions.
“There’s been a big rally. It’s gone a lot further than most people thought. (Wednesday) was the day that some people decided to say ‘It’s time to take some profits,’ ” said Robert D. Sbarra, managing director at Carroll McEntee & McGinley Inc.
What most analysts said was a normal correction, however, appeared to be exacerbated by an auction of five-year Treasury notes that drew weak demand from securities dealers and retail buyers.
The Treasury sold $11 billion worth of five-year maturities at a yield of 5.23%, up to six-hundredths of a point higher than had been expected. The oversupply of both long- and short-term securities left the market with what one trader described as a case of “indigestion.”
But many analysts said they do not expect to see an end to the advance in government securities prices that began in November.
“The fundamentals remain in place for long-term interest rates to ratchet down,” said Brian Keyser, an economist at CRT Government Securities Ltd.
The federal funds rate, the interest on overnight loans between banks, was 2%, down from 2.875% late Tuesday.
Other Markets
The dollar firmed against major foreign currencies in dealings inspired more by technical trading strategies than economic developments.
The dollar moved within a fairly defined price range during the day as traders were unable to find any remarkable economic news to bid it higher, said George Lopez, a trader at First Boston Corp.
“It’s really technical moves right now,” he said.
In New York, the dollar closed at 117.475 Japanese yen and 1.627 German marks, up from 11.05 yen and 1.623 marks, respectively.
The British pound settled at $1.431, down from $1.453 late Tuesday.
Meanwhile, in commodities trading, gold fell $1.40 to $329.70 an ounce on New York’s Commodity Exchange. Silver sank 2.2 cents to $3.56 an ounce.
In energy trading on the New York Mercantile Exchange, light, sweet crude oil for April delivery rose 5 cents to $20.53 a barrel.
Market Roundup, D6
