Dow Rallies After EC Acts on Currencies : Market Overview
Stocks rallied in Europe and America on Monday amid hopes that a realignment of European currencies will bring lower interest rates to the Continent. The Dow industrials rose 21.52 points.
* Treasury yields closed mixed, while gold eased. But other commodities surged, led by soybeans.
Stocks
European stocks were broadly higher, responding to the European Community’s move early Monday toward de facto devaluation of most currencies against the powerful German mark.
The decision to let the French franc and other currencies float widely versus the mark is expected to lead to lower interest rates across recession-bound Europe.
In Paris, the CAC-40 stock index rocketed 43.15 points, or 2.1%, to 2,129.03, just shy of its all-time high of 2,129.32 set in April, 1990.
In London, the FTSE-100 index rose 15.2 points to 2,941.70. In Brussels, the BEL-20 index jumped 1.4%; in Madrid shares rose 1%.
Stocks even rose in Frankfurt, though Germany isn’t expected to join its counterparts in quickly lowering rates. The DAX-30 index rose 11.85 points to 1,815.08.
In the United States, the Dow industrials shook off Friday’s profit taking and advanced 21.52 points to 3,560.99. Winners topped losers by about 12 to 7 on the New York Stock Exchange, but on slow volume of 230.4 million shares.
Traders said investors were heartened not only by expectations of lower European interest rates, but also because European currencies did not sink dramatically despite the undeclared devaluation.
The French franc lost 2% of its value against the mark, but some traders had expected much worse.
In fact, the surprise loser Monday was the dollar: It dropped to 1.709 marks in New York from 1.741 Friday, and to 104.50 Japanese yen from 104.80 Friday.
A falling dollar makes U.S. exports cheaper overseas, which helps the U.S. economy.
Among the market highlights:
* Industrial stocks rose, powered in part by hopes for a European recovery. 3M rose 1 3/8 to 106 3/8, Alcoa gained 1 to 71 3/4, United Technologies added 1 5/8 to 55 7/8, PACCAR jumped 3 to 64 3/4 and Briggs & Stratton leaped 2 3/8 to 73.
* Auto stocks were higher after the companies reported strong mid-July sales. GM gained 1 1/8 to 49 5/8, Ford added 1 3/4 to 54 1/2 and Chrysler rose 1/2 to 44 3/8.
* Motorola led a broad advance in technology issues, surging 3 3/4 to 94 3/8 on a positive report on its new global telecommunications network project. Other tech winners included Computer Associates, up 1 1/8 to 29 5/8; Oracle, up 1 5/8 to 52; Newbridge Networks, up 1 3/8 to 57 1/8; and Dell, up 7/8 to 21.
In other overseas markets, Tokyo’s Nikkei average eased 36.61 points to 20,343.53.
Other Markets
Bond yields were mixed, with long-term yields falling slightly while short-term rates moved up.
The federal government estimated its borrowing needs this quarter at $58.3 billion, less than expected. That helped long-term bond rates: The 30-year Treasury bond yield slipped to 6.55% from 6.56% Friday.
But a jump in commodity prices pushed short-term rates up on new worries about inflation.
The Commodity Research Bureau’s index of 21 key commodities rocketed 3.66 points, or 1.7%, to 222.92, led by a surge in soybean prices in the flood-stricken Midwest. August soy futures jumped 19 cents to $7.04 1/2 a bushel.
Coffee, sugar, orange juice, oil and wheat prices also rose. In precious metals trading, gold futures for August eased $1.10 to $405.90 on New York’s Comex. But silver added 5.1 cents to $5.44.
Market Roundup, D8
