Stock Prices on Year-End Ride; Dow at New High
Market Overview
* Blue-chip stocks inched up to new highs Tuesday, and smaller stocks began to catch up as the year-end rally continued.
In foreign markets, however, the action cooled somewhat.
* Bond yields closed mostly unchanged, while oil and gold slipped.
Stocks
The Dow Jones industrials couldn’t maintain the power behind Monday’s 35.21-point surge, but the index still managed to inch up 0.84 point to a record 3,793.77.
Also rising to records were the Standard & Poor’s 500-stock index, up 0.40 point to 470.94, and the New York Stock Exchange composite, up 0.44 point to 260.51. The previous NYSE record was 260.48 on Oct. 15.
Meanwhile, in the Nasdaq market, the composite index jumped 3.50 points to 764.56 as buying filtered down to recently beaten-up smaller stocks.
“I don’t think there’s a lot of new news,” said William Dodge, chief investment strategist with Dean Witter, Discover & Co. in New York. “The market is doing its year-end thing.”
Stocks often rise at year’s end, as tax-related selling dries up and buyers attempt to get a jump on a potential new-year rally.
Positive economic reports Tuesday may have helped bolster sentiment, traders said.
One report showed the Conference Board consumer confidence index for December jumping well above Wall Street predictions.
In a second report, the Commerce Department said U.S. industry in 1994 should enjoy the fastest growth in six years, driven by sales of computers and machinery to businesses and of autos and homes.
Bond yields closed flat despite that good news, which gave the stock market more confidence, traders said.
“I think the market is of the opinion, and rightly so, that the economy will grow moderately in 1994--2.5% to 3%--inflation will be well contained, interest rates will be stable to lower, and profits will grow 10% or so, which is a sweet set of circumstances for stocks,” said Steven Einhorn, strategist at Goldman, Sachs & Co. in New York.
Among the market highlights:
* Investors continued to pick and choose among industrial stocks that should do well in a strengthening economy. Alcoa rose 1 1/8 to 69 3/4, Clark Equipment surged 1 1/8 to 50, Illinois Tool Works added 1/2 to 38 5/8, United Technologies advanced 1 to 63 and USX-U.S. Steel gained 3/4 to 40 3/4.
* Auto stocks powered ahead. GM gained 1/2 to 56 3/4, finally topping its previous all-time closing high of 56 3/8 (adjusted for stock splits) set in 1965. Ford added 1/4 to 64 3/4 and Chrysler rose 5/8 to 53 7/8.
* Retail issues were mixed in active trading as investors took stock of the holiday shopping season, which some analysts said fell short of expectations. Tiffany was trounced, losing 4 1/4 to 31 7/8 after the luxury goods retailer reported slower than expected overseas Christmas sales.
Elsewhere, Nordstrom fell 1 to 32 3/4 and Sears eased 3/8 to 51 7/8, but Kmart gained 3/4 to 21 3/4, Dayton Hudson rose 1 1/4 to 67 7/8 and TJX jumped 1 to 29.
* Computer chip makers gained on news that the United States ordered emergency talks with Japan, following news that foreign chips’ penetration of the Japanese market was falling below agreed-upon minimums. Intel was up 1 1/4 to 64, Advanced Micro Devices rose 5/8 to 18 1/8, Motorola gained 1/2 to 91 7/8 and Texas Instruments added 1/2 to 63 1/8.
* Other key technology issues also gained. Microsoft jumped 2 1/4 to 82 3/4, Compaq surged 1 3/4 to 75 1/4 and Cabletron Systems added 1 3/8 to 112 1/8.
* Investors returned to some battered young growth stocks, and that helped pull the Nasdaq market up. Iwerks Entertainment surged 2 to 25 3/4, Nextel Communications gained 1 1/2 to 38 3/4, Barnes & Noble leaped 1 5/8 to 24 1/4 and Deckers Outdoor jumped 1 to 18 1/4.
Overseas, European markets cooled off from recent hefty gains. In Frankfurt, the DAX 30-share index closed down 11.16 points at 2,242.82. In Paris, the CAC 40-share index ended down 11.91 points at 2,264.64. The London stock market was closed for an extended holiday.
In Tokyo, the Nikkei average continued to seesaw, closing at 17,131.21, up 311.33 points.
The bulls continued to run in Hong Kong: The Hang Seng index made its biggest one-day jump ever as foreign funds poured into the market. The index finished up 530.38 points, or 4.8%, to a record 11,570.22.
Other Markets
Bond yields were mostly unchanged after rising early in the session on strong economic reports.
The yield of the Treasury’s main 30-year bond held steady at 6.23%.
Traders said a holiday calm prevailed throughout the bond market. Volume was light as many participants were on vacation and some large firms had closed their books for the year.
In other markets:
* Currency markets shrugged off the consumer confidence figures and the dollar drifted lower against most major currencies in listless trading. In New York, the dollar finished at 111.38 Japanese yen, down from 111.40 on Monday.
* On the New York Commodity Exchange, gold for current delivery closed at $387.40 an ounce, down 50 cents.
* Oil prices finished slightly lower, and gasoline rebounded from the previous day’s drop in a volatile session that had little news to influence traders. Light, sweet crude oil for February settled at $14.11 a barrel, down 2 cents, at the New York Mercantile Exchange.
* Corn prices extended a 12-week rally to new five-year highs as large commercial users bought heavily to meet domestic needs. March corn futures rose 1 cent to $3.02 3/4 a bushel, the highest level since June, 1988.
Since Oct. 5, corn prices have risen 24%, due to a smaller harvest this year and good demand both domestically and overseas.
Steve Bruce, an analyst with Geldermann, said an upcoming Agriculture Department crop report will probably lower the estimate of this year’s corn harvest to 6.3 billion to 6.4 billion bushels, well down from last year’s 9-billion-plus crop.
Market Roundup, D8
