Dow Up 24.21; Currency and Bonds Stable
Market Overview * Blue chips shares closed sharply higher Tuesday as investors flocked to the market, afraid of missing out on a rally that could take stocks into record territory.
* The dollar rebounded against the Japanese yen as dealers took a breather from a dramatic selloff sparked by fears of a possible U.S.-Japan trade war.
* Treasury bond yields ended largely unchanged amid a lack of factors to guide investment decisions.
Stocks
Stocks were encouraged by the stable bond and currency markets as well as easing fears of a trade war between Japan and the United States.
The Dow Jones average rose 24.21 points to 3,928.27, on Big Board volume totaling 306.79 million shares. At the same time, advancing issues outnumbered declines by about 4 to 3 on the New York Stock Exchange.
The steady interest rates and modestly recovering dollar cleared the way for the stock market’s advance, analysts said.
Analysts also said the strong advance illustrated the level of investors’ confidence after the market weathered U.S.-Japan trade tensions that battered currency and bonds Monday.
The markets brushed aside the announcement by U.S. Trade Representative Mickey Kantor that Japan’s violation of an agreement on cellular telephones may lead to retaliatory measures.
Also pushing stocks Tuesday higher was better-than-expected industrial production.
Production climbed 0.5% last month, compared to an expected gain of about 0.4%.
Stocks ended mixed abroad. In Tokyo, the yen’s relentless surge since Friday’s failure of U.S.-Japan trade talks sent Tokyo stocks skidding for the second straight day Tuesday. The 225-share Nikkei ended the day down 484 points, or 2.49%,, to 18,974.60.
Among the market highlights:
* Viacom won its five-month battle against QVC Network Inc. for Paramount Communications, which rose 7/8 to 77 on the NYSE. QVC said it dropped its rival bid and the stock rose 1 3/4 to 50 1/4. Viacom class B stock lost 1 7/8 to 28 and Blockbuster Entertainment, which joined Viacom in its bid, rose 3/8 to 25 1/4.
Minnesota Mining rose 2 5/8 to 108 3/8, Caterpillar added 1 1/2 to 107 1/2 and Goodyear Tire finished up 1 1/2 to 47 1/2.
* United Healthcare fell 5/8 to 85 after the company agreed to buy Ramsay-HMO in exchange for 5.9 million common shares. Ramsay rose 9 1/4 to 55 1/8.
* Softimage rose 6 1/8 to 21 1/4. Microsoft said late Monday it agreed to acquire the company, a leading developer of high-performance 2-D and 3-D computer animation and visualization software. Microsoft rose 5/8 to 79 3/4.
* United Healthcare, fell 5/8 to 85 after it agreed to buy Ramsay-HMO in exchange for 5.9 million common shares. Ramsay rose 9 1/4 to 55 1/8.
Currency
The dollar started out lower but strengthened after the government’s industrial production report. “The statistics showed more economic growth,” which is positive for the dollar, said Andrew Busch, a senior vice president of Harris Trust & Savings Bank in Chicago.
Bargain-hunting traders also boosted the U.S. currency after its huge selloff Monday, when traders dumped dollars on concerns that the Clinton Administration would drive the American currency lower against the Japanese yen after last week’s breakdown of trade talks.
The dollar closed in New York at 103.85 Japanese yen, up from 102.65 yen on Monday, its lowest closing level against the Japanese currency since Aug. 18. In Tokyo, the dollar finished at 102.02 yen, down 3.67 yen from Monday.
Other Markets
The Treasury’s main 30-year bond yield was ended unchanged at 6.45%, while its price slipped 1/32 point, or 31 cents per $1,000 in face value. The only price movement was in intermediate government maturities, which rose 1/32 point to 1/8 point, the financial information service Telerate Inc. reported.
Gold prices fell slightly in domestic trading. On the New York Comex, gold for current delivery settled at $383.80 an ounce, down 10 cents from Monday. Silver closed at $5.255 an ounce, down from $5.343 late Monday.
Cash-strapped California sold a record $3.2 billion in short-term notes Tuesday to help fund state operations through the end of the current fiscal year and to pay off part of its long-term debt.
The state sold $1.2 billion in notes at an average interest rate of 3.02% and $2 billion at an average rate of 2.81%. The first series will mature on Dec. 21, the second on July 26. Ten firms participated in the competitive bidding, many on behalf of syndicates.
Market Roundup, D8
