Dow Hits 2nd Straight High; Gold, Silver Up : Market Overview
* Blue-chip stocks closed on record ground for a second straight session Wednesday, led by gains in cyclical shares that tend to benefit from a stronger economy.
* The dollar surged against the Japanese yen amid rumors about how much the U.S. currency might be allowed to rise.
* Gold futures prices bounded to a four-month high on buying driven by economic improvement and a tight supply outlook.
Stocks
Stocks dragged for most of the session, gathering momentum on the up side only late in the day, apparently with the economic news from the Federal Reserve Board and a turnaround in bond prices.
The blue-chip average rose 15.65 points to 3,734.53, eclipsing its previous mark of 3,718.88 set Tuesday, on heavy Big Board volume of 312.48 million shares.
But uncertainty ahead of pending inflation data kept gains in check in the broad market. Advancing issues narrowly outnumbered declining ones on the New York Stock Exchange.
For much of Wednesday, there was little to inspire investors.
“Even though (the Dow) is making new highs, it’s really without much fanfare, because the broad market is not performing that well,” said Guy Truicko of Unity Management.
Investors continued to resist significant commitments before the release of November inflation data todayy and Friday, he said. The government is scheduled to release reports on producer and consumer prices.
Secondary stocks also failed to keep up with strength in the Dow index. The Nasdaq composite fell 1.46 points to 767.89, weighted by a downturn for heavyweight Microsoft Corp.
Analysts said Microsoft would likely miss the target date for its “Chicago” operating system upgrade, while the company said it is on track. Microsoft fell 2 to 83 1/2, and Goldman Sachs cut its fiscal 1995 earnings estimate.
Among other market highlights:
* So-called cyclical stocks jumped after the news, led by Aluminum Co. of America, which rose 3 1/4 to 72 1/2. Other industries performing well in the category were heavy machinery, chemicals and papers.
* Xerox jumped 5 5/8 to 86 3/8 after the company said it will eliminate more than 10,000 jobs, or about 10% of its worldwide work force.
* U.S. Surgical fell 1/2 to 21 after the company said it expected to report losses for its upcoming fourth and first quarters.
The concern about inflation pushed up stocks in gold mining companies. Gold is often considered a hedge against inflation. On the American Stock Exchange, Echo Bay Mines rose 3/4 to 13 1/2, while American Barrick rose 1 to 28 1/8 and Newmont Mining rose 3 to 56 on the NYSE.
* In Nasdaq trading, Gateway 2,000 was quoted at 19 1/4, up 4 1/4. The initial public offering of 10.9 million shares was priced at $15 a share.
Shares prices soared in European trading and plunged in Japan. Tokyo’s Nikkei 225-share average index closed down 395.54 points, at 16,507.95, amid disappointment over delays in government action to bail out the sinking economy. Frankfurt stocks closed at a high as German funds and foreign institutions pushed prices up in largely technical trading. The DAX 30-share average closed at 2,148.13. up 32.67 points. In London, share prices were powered to fresh records as buyers piled into a market boosted by sharp gains in government bond prices. The Financial Times 100-share average closed 40.1 higher, at 3,277.4.
Dollar
Currency trading began on a confusing note in domestic markets. Rumors had been circulating that Federal Reserve Gov. Wayne Angell had said that 120 Japanese yen would be a good level for the dollar, and the U.S. currency began climbing.
“That wasn’t to be a target any central bank is using, but rather his personal opinion,” said Randolph Donney, research director at Pegasus Econometric Group.
Soon Angell denied the rumor and the dollar edged back a bit. Other rumors about Japan helped push the yen down further.
Elsewhere, the dollar was mostly higher as traders closed out strategies ahead of the next wave of economic data.
The dollar closed in New York at 108.87 Japanese yen and 1.707 German Marks, up from 107.45 yen and 1.702 marks, respectively.
The British pound rose to $1.495 from $1.493 on Tuesday.
Other Markets
Gold for current delivery settled at $383.80 an ounce, up $6.40, on the New York Comex; silver settled at $4.975 an ounce, up 6.9 cents from Tuesday. Platinum climbed $5.30 to $383.70 an ounce on the New York Merc.
The precious metals have been rising since late September, led by silver, the most sensitive to broad economic signals because of its widespread industrial use.
“The driving force behind the turnaround in the market has been the fact that you’ve got more industrial demand now for gold than is actually being produced,” MacDonald said.
Elsewhere, crude oil for January delivery fell 11 cents to $14.59 a barrel on the New York Merc.
Meanwhile, in the bond market, the yield on the government’s main 30-year rose slightly, to 6.17% from Tuesday’s 6.16%.
Bond analysts attributed the market’s softness partly to worries about whether the Fed will raise short-term interest rates as the economy grows stronger.
Market Roundup, D6
