FINANCIAL MARKETS : Small Stocks Lead Market to Record; Dollar Eases
Market Overview
* Another wave of buying in smaller stocks pulled the market up to new highs Tuesday. Blue-chips also hit a record as consumer stocks rebounded.
* The dollar’s fall against the yen continued, though it failed to break 100 yen. In the bond market, yields inched up.
Stocks
Small-company stocks, which have led the market’s rally since mid-July, turned in another good day.
The NASDAQ composite index of mostly smaller stocks jumped 4.12 points to a record 731.01, the seventh closing high in 10 sessions.
Another small-stock index, the Russell 2000, hit a record, as did the American Stock Exchange market value index and the Standard & Poor’s mid-cap index.
The Dow Jones industrials also reached a new high, adding 7.83 to 3,586.98, topping the old peak of 3,583.35 reached Aug. 11.
Traders said the strong performance of smaller stocks was led by technology issues, but that interest was gaining in other issues as well.
Still, winners topped losers by just 12 to 10 on NASDAQ. And analysts noted that, with many players on vacation, thin trading volume in many stocks left them vulnerable to sharp swings.
Among the market highlights:
* The Dow benefited from a rebound in downtrodden consumer growth stocks. Drug stocks, for example, rocketed after news reports suggested that the Clinton Administration’s health plan won’t be as onerous as feared for the companies.
Warner-Lambert jumped 1 3/4 to 67 5/8, Merck shot up 1 3/8 to 30 7/8, Bristol-Myers rose 1 1/2 to 54 5/8, Biogen surged 2 3/4 to 30 1/4 and Amgen was up 1 1/4 to 34 3/4.
* Food stocks surged after Ralston-Purina said it may spin off some of its businesses. The news suggested food companies may take major action to shore up their faded profit prospects.
Ralston jumped 2 1/2 to 36 7/8, Quaker Oats zoomed 2 5/8 to 67 5/8, Philip Morris leaped 1 7/8 to 48 3/8 and Heinz rose 1 5/8 to 36 5/8.
* Transportation issues were strong. United Airlines parent UAL gained 2 7/8 to 147 1/4, Norfolk Southern leaped 2 to 67 and Federal Express was up 1 5/8 to 57 1/2.
* In the technology area, Hewlett-Packard shares plunged as low as 68 1/2 after the firm reported earnings below expectations. But the stock rebounded by the close to 74, off just 1 1/4 for the day.
Tech stocks in general continued to advance: IBM rose 2 to 43, Motorola gained 1 1/8 to 98 1/8, Sybase jumped 2 1/2 to 74 and Micron Technology soared 4 3/8 to 55.
* Profit taking hit some bank stocks, including First Interstate, off 2 7/8 to 60 5/8, and Wells Fargo, down 2 3/8 to 111 3/4.
Overseas, London’s FTSE-100 index hit a record high, up 16.7 points to 3,025.0. But Frankfurt’s DAX index eased 2.02 points to 1,910.17, and Tokyo’s Nikkei index lost 59.51 points to 20,841.98.
Other Markets
The dollar ended weaker against the yen after recovering from a record low overnight. Many traders believe a break below 100 yen is only days away.
The dollar finished at 101.05 yen in New York, down from 101.68 on Monday but up from a post-World War II low of 100.25 yen in overnight trading in Asia.
In the bond market, yields inched up from the lows reached Monday, but many analysts remain bullish about the prospects for still lower long-term interest rates soon.
The yield on the benchmark 30-year Treasury bond closed at 6.31%, up from Monday’s historic low of 6.30%.
Elsewhere, near-term gold futures slipped $1.50 to $371.60 an ounce on New York’s Comex. Silver lost 4.5 cents to $4.70.
