Concentrated Buying Pushes Dow Up 9; Yields Also Rise
Market Overview
* A burst of buying concentrated in some key blue-chips pushed Wall Street stocks higher near the end of the session Thursday, while buyers nibbling at recently battered secondary stocks helped boost the rest of the market.
* More signs of economic strength pushed up the yield on the Treasury’s long bond.
Stocks
Trading was dominated by individual company news and failed to follow a consistent, marketwide pattern. Activity was restrained as market professionals prepared to adjust their holdings Friday when stock options and futures expire. This quarterly phenomenon typically inflates volume and causes volatility.
The Dow Jones industrial average closed with a gain of 9.22 at 3,726.14 after meandering modestly above and below its starting point for most of the day. The blue-chip indicator had lost a total of 47.51 points on Wednesday and Tuesday.
In the broader market, advancing issues outpaced declines by better than a 7-6 margin on the New York Stock Exchange. Big Board volume was a moderately heavy 284.62 million shares.
Some stocks benefited from buying by investors eager to snap up bargains after two days of declining prices. Others were depressed by pessimistic profit forecasts and similarly downbeat news.
Economic news appeared to have little influence on stocks.
Strength in stocks overseas was a plus for Wall Street. Tokyo’s 225-share Nikkei average closed at 17,789.28, up 300.13 points, while Frankfurt’s 30-share DAX average rallied 32.4 points to end at 2,137.45. London’s Financial Times 100-share average closed gained 32.4 points to finish at 3,311.2.
In Mexico, meanwhile, the Bolsa rose 32.99 points to 2,422.85.
Among the market highlights:
* Merry-Go-Round was the most active issue on the NYSE and tumbled 3 1/4 to 2 7/8 as more than 9.7 million shares changed hands. Investors dumped the stock amid rumors that the company was having trouble meeting its financial obligations.
* The Alex. Brown analyst, Robert Buchanan, also cut the rating on apparel retailer Limited, which was the third-most-heavily traded NYSE stock. It gained 3/8 to 17 3/8.
* Eastman Kodak was the second-most-heavily traded NYSE issue and it extended its slide, down 1 1/4 to 54 1/4. The stock’s descent began Wednesday when the company’s chairman warned that next year’s earnings will fail to meet Wall Street expectations.
* Another active Big Board loser was Fruit of the Loom, which slumped 3 1/2 to 24 3/8. The company issued a gloomy assessment of the fourth-quarter earnings.
* The Dow transportation average was hurt by a slide in UAL stock. UAL, parent of United Airlines, fell 4 3/8 to 144 1/4 as the company’s board of directors was presented with details of a tentative employee buyout agreement valued at more than $5 billion. Investors reportedly found it difficult to assess the offer because little information was available.
* On the positive side, Boeing gained 1 to 43 3/4 while Minnesota Mining & Manufacturing gained 1 1/4 to 113 and both contributed to the overall increase in the Dow industrial average.
* Among the stocks lifting the over-the-counter market, Nextel Communications rose 3 to 36 1/2. Analysts repeated buy recommendations after a company conference call. Nextel’s partly held American Mobile Systems rose 2 1/4 to 15 1/2.
* Procyte gained 3 3/8 to 14 3/8 after U.S. regulators cleared the restart of clinical trials for its Iamin ulcer treatment. A halt in testing last week caused a stock selloff.
Other Markets
The 30-year bond yield rose to 6.29% from Wednesday’s 6.27%, pushing its price up 1/4 point, or $2.50 per $1,000 in face value.
Several government reports indicated that the economy grew briskly in the fourth quarter, including increases in both merchandise imports and exports in October and a decline in the number of Americans who filed for unemployment insurance last week.
Investors in bonds are concerned that stronger economic growth will aggravate inflation, which cuts into the value of fixed-income securities.
However, reaction to Thursday’s news was muted because it merely confirmed what previous reports already have shown.
Meanwhile, the dollar fell against most other major currencies Thursday as the United States announced it had the worst ever trade deficit with Japan.
Elsewhere, gold for current delivery closed off $1.40 at $386.00 an ounce on the New York Comex. Silver for currency delivery closed at $5.012 an ounce, down 7.5 cents from Wednesday’s from $5.086 an ounce.
Market Roundup, D6
