Merger News Lifts Stocks; Yields Plunge : Market Overview
Strength in communications stocks, inspired by news of a multibillion-dollar merger of two industry powerhouses, drove the market higher Monday and carried two indicators to record closes.
* Treasury bond prices soared as yields plunged to new lows amid speculation that the Federal Reserve would decide against pushing interest rates higher today.
* The dollar tumbled against the German mark and touched a new low against the Japanese yen as disappointment in last week’s failed rally prompted selling.
Stocks
Communications issues took center stage after American Telephone & Telegraph and McCaw Cellular Communications, a cellular telephone company, announced plans to unite. Shares of related companies surged on the news. McCaw Cellular jumped 5 to 56 1/4. AT&T; eased 1 5/8 to 60 3/4. Among cellular stocks, Lin Broadcasting jumped 12 3/4 to 115. McCaw owns 52% of Lin. Vanguard Cellular gained 1 3/4 to 31 1/4, Cellular Communications added 2 to 42 3/4, and Comcast added 1 3/4 to 28 7/8.
Elsewhere in telecommunications, DSC Communications gained 2 3/8 to 58 1/8, QualComm gained 2 to 77 3/4, Vodafone rose 3 1/4 to 80 1/8 and Newbridge Network rose 2 1/8 to 58 3/4.
The Dow industrials rose 9.50 to 3,579.15. A solid gain in Aluminum Co. of America stock, which rose 2 1/4 to 73 7/8, helped lift the blue-chip barometer. Rounds of program buying also supported the average and allowed it to overcome a decrease reflecting dividend-related adjustments.
Stock investors also were encouraged by falling interest rates in the bond market.
The NASDAQ market’s composite index swept past its previous closing peak and the American Stock Exchange market value index also finished at a new high. The NASDAQ index, which is heavily weighted toward telecommunications issues, roared ahead by 8.63 to 726.89, exceeding its previous closing high of 718.88 reached Aug. 11. The index has closed at a record in six of the last nine sessions.
The Amex market value index rose 2.25 to 441.33. It bettered the closing high of 440.95 set June 4.
Steven Resnick, senior investment strategist at Cowen & Co., said that outside the communications sector, investors concentrated on issues that have turned in good performances recently.
An example was Intel, which gained 4 5/8 to 64 3/8 and was the heaviest-traded NASDAQ stock. Motorola rose 7/8 to 97; a judge dismissed a suit raising health questions about the use of cellular phones against Motorola and other phone companies.
Among drug stocks, Eli Lilly rose 1 1/2 to 45 1/8, Upjohn gained 1 to 26 3/4, Pfizer added 2 1/8 to 59 1/4 and Merck gained 3/4 to 29 1/2.
London’s Financial Times 100 index closed just 1.8 points down at 3,008.3, while Frankfurt’s 30-share DAX index closed 5.61 points higher at 1,912.19. In Tokyo, the 225-share Nikkei average was up 156.32 points to 20,901.49. In Mexico City, the IPC index ended down 1.94 points at 1,842.58.
Other Markets
The yield on the Treasury’s main 30-year bond fell to 6.30% from Friday’s record low close of 6.35%. The dollar was at 1.6858 marks in late New York trading, down from 1.7113 on Friday. Expectations of 100 yen per dollar helped the dollar close in New York at 101.68 yen, down from 101.88 on Friday.
Gold rose $3.80 from Friday’s close on New York’s Commodity Exchange, where bullion for the most-active December contract ended at $376.40 an ounce.
Market Roundup, D10
