FINANCIAL MARKETS : Dow Leaps 45 to Close Above 3,400 : Market Overview
The stock market soared in late trading, encouraged in part by reports from Washington of broadening support for President Clinton’s economic plan. The Dow Jones industrial average jumped 45.12 points to close at 3,400.53.
* Treasury bond yields dipped as the government put forward further evidence of a modest economic recovery.
Stocks
Stocks, which moved steadily higher throughout the afternoon, suddenly exploded late in the day.
Institutional investors came alive late in the session after reports that House Speaker Thomas S. Foley (D-Wash.) and other top Democratic lawmakers had spoken of growing support in Congress and among voters for Clinton’s fiscal stimulus plan.
The Dow, up 15 points at 3 p.m. EST, rocketed more than 30 points in the final hour of trading. By the close, winners topped losers by 2 to 1 on the Big Board.
According to reports from Washington, congressional leaders said a budget resolution and the main portions of Clinton’s plan might be passed by the April 5 Easter recess.
“That encouraged some institutional investors to move off the sidelines,” said Hugh Johnson, analyst at First Albany Corp.
As demand for stocks rose, computerized buy programs kicked in, exaggerating the rally. At the close, Big Board volume totaled 275.90 million shares, up from 237.02 million on Monday but still relatively subdued compared to recent weeks.
The rally extended to the market of smaller stocks, which has been attempting to climb back from a steep dive in February. The NASDAQ composite index jumped 8.21 points to 677.72, a gain of 1.2%.
Investors were also encouraged by new economic reports showing the recovery remains on track, if moderate. The government’s chief forecasting gauge, the index of leading indicators, inched up a better than expected 0.1% in January, suggesting a steady but modest expansion this year. Economists had forecast a 0.2% decline.
“The numbers suggest we are in a no-boom, no-bust trajectory,” Johnson said. “That means we can have continued improvement in corporate earnings without worrying about inflation or interest rates.”
Among the market highlights:
* Energy stocks led the rally. They are expected to benefit from a recovering economy. Investors also appear to be downplaying any negative effects from Clinton’s proposed energy taxes.
Among major oil stocks, Chevron rose 1 3/8 to 79 3/4, Arco gained 1 5/8 to 122, Mobil added 1 1/4 to 68 7/8, Royal Dutch jumped 2 1/8 to 86, and Texaco rose 1 3/8 to 64 1/4.
* Industrial issues were strong across the board. W.R. Grace rose 1 to 37 3/4, Ford added 1 1/2 to 47 7/8, GE leaped 2 1/8 to 85 1/2, and Goodrich zoomed 2 3/4 to 44.
* Technology stocks, beaten down in recent weeks, also rose sharply. Texas Instruments gained 3 1/4 to 58 3/8, Intel surged 4 1/2 to 119 1/2, Hewlett-Packard jumped 2 to 75 1/4, Microsoft leaped 3 1/8 to 84 5/8, and Cisco was up 2 7/8 to 88 5/8.
* Tobacco stocks, which had fallen recently on talk of higher cigarette taxes, climbed for a second day. Philip Morris jumped 2 1/4 to 67 1/2, and RJR Nabisco rose 5/8 to 9.
RJR proposed Tuesday to issue a new class of stock tied to the performance of its food businesses.
* On the downside, BankAmerica slipped 1 to 52 1/2. Donaldson, Lufkin & Jenrette cut its earnings estimates, citing expectations of lower loan revenue this year.
Overseas, London’s Financial Times 100-share average lost 0.3 point to close at 2,882.3.
In Frankfurt, stocks ended slightly weaker. The DAX average closed down 4.21 points to 1,696.74.
In Tokyo, the Nikkei average eased 5.35 points to 16,864.25.
Credit
Friday’s explosion at New York’s World Trade Center, home to many big bond traders, kept bond trading light again Tuesday.
The yield on the Treasury’s 30-year bond closed at 6.83%, down from 6.84% on Monday.
There was little reaction in the bond market to the Commerce Department’s index of leading indicators and housing reports.
Larry Wipf, an economist with Norwest Corp. in Minneapolis, said the reports kept yields within their downward orbit and reflect “that economic growth will slow in the next several months versus the rapid pace that ended 1992.”
Other Markets
The dollar settled lower on world currency markets as prospects dimmed for lower interest rates in Germany.
The market had been full of anticipation that Germany’s Bundesbank would lower rates at a key council meeting scheduled for Thursday. But the latest indications from the central bank are that rates will remain unchanged.
Lower rates in Germany would be expected to depress the mark and benefit the dollar.
The dollar closed in New York at 1.640 marks, down from 1.655 on Monday. It also closed at 117.73 Japanese yen versus 118.70.
On the New York’s Comex, April gold rose $1.20 an ounce to $329.80. March silver rose 0.5 cent to $3.56.
Oil futures eased on the New York Merc. Light, sweet crude for April fell 13 cents to $20.47 a barrel.
Market Roundup, D6
