Dow Posts a Third Rise; Yields Ease
Stocks gained for a third straight day Thursday, as the bond market’s tone improved further.
The Dow Jones industrials rose 13.53 points to 3,693.26, and the broad market also looked better: Winners outnumbered losers by a healthy 9 to 5 on the New York Stock Exchange.
Most other stock indexes showed bigger percentage gains than the Dow, as bargain hunters continued to ease back into the market.
The Russell 2,000 index of smaller stocks advanced 0.6%, rising 1.42 points to 255.95.
Since Tuesday, the Dow has risen nearly 100 points, after plummeting more than 200 points in six out of seven previous trading sessions--a reaction to a surge in interest rates and fears the economy was growing too rapidly.
Traders said the bond market’s relative calm over the last few days, which has allowed interest rates to slip, has given stock investors more incentive to return to the market.
Bond yields were marginally lower Thursday, although new reports showed economic strength.
The government said American businesses plan to increase their investment in new buildings and equipment by 8% this year--the biggest rise since 1989.
Also, major retailers on Thursday reported double-digit sales gains in March.
If some bond investors viewed those reports as more omens of rising inflation, they were outnumbered Thursday by buyers who apparently believe the recent surge in interest rates has been overdone.
“I’m saying the bulk of the selloff is done with, and you should be looking” to buy bonds, said Roger Marshall, president of Riggs Investment Management. Marshall, who manages about $2 billion in bonds, was bullish for the first time in six months.
The yield on 30-year Treasury bonds eased to 7.20% Thursday from 7.24% Wednesday. Shorter-term yields also ratcheted downward.
The bond market may have been relieved that Federal Reserve Chairman Alan Greenspan didn’t deliver a hawkish speech on interest rates Thursday, as had been rumored early in the day.
Greenspan, speaking in San Francisco, expressed no inflation worry and did not refer to interest rates directly. Some analysts said that may indicate the Fed is willing to sit tight for now, since raising short-term interest rates twice in the first quarter in an attempt to slow the economy.
Eugene Peroni, technical analyst at Janney Montgomery Scott, said the recent losses in stocks had placed some shares in a position to rebound sharply on good first-quarter earnings reports this month.
“I think we are forming a bottom, not one that is major, but one that would endure for the next three to five weeks,” he said.
Among Thursday’s highlights:
* Technology stocks were broadly higher, helped by a strong quarterly earnings report from computer workstation maker Sun Microsystems. Sun shares soared 3 1/8 to 25 3/8.
Other tech winners included Hewlett-Packard, up 2 1/4 to 83 3/4; Intel, up 1 to 70 5/8; AST Research, up 2 1/4 to 21 3/4; and Dell Computer, up 1 3/8 to 29. Western Digital, which also reported strong earnings, surged 1 1/4 to 19 1/2.
* Many retail stocks gained on their March sales reports. Gap soared 2 1/4 to 49; Toys R Us jumped 1 1/2 to 35 7/8; Nordstrom leaped 1 3/4 to 44 1/4; Dillard surged 2 1/4 to 35 3/4 and Dayton Hudson was up 1 5/8 to 78 3/4.
But electronics retailer Tandy Corp. collapsed 3 5/8 to 32 1/2 on a disappointing sales report.
* Industrial stocks were mixed. AlliedSignal fell 1 to 36 1/8 and International Paper fell 1 to 66 1/8. Du Pont gained 1 1/8 to 55 1/4; GM leaped 1 3/8 to 60 1/8; Parker-Hannifin surged 1 3/4 to 38 3/4.
* Some financial issues rebounded as interest rates eased. Chemical Banking gained 1 5/8 to 38; BankAmerica surged 1 1/2 to 41 3/8; First Chicago was up 1 1/2 to 49 3/4 and NationsBank rose 1 1/2 to 47 3/4.
* Some casino stocks bounced back from a dive Wednesday, when Missouri voters rejected a referendum that would have allowed slot machines in the state’s casinos. Caesars World soared 3 1/4 to 48 1/2; Circus Circus shot up 1 5/8 to 32 3/8; Hilton gained 2 1/8 to 60. But Argosy Gaming slipped 1/4 to 19 1/2.
Overseas, foreign stocks closed mostly higher again. Tokyo’s Nikkei index closed up 194.24 points at 19,890.98. In Frankfurt, the DAX index ended 10.21 points higher at 2,201.41. But London’s FTSE-100 index eased 2.5 points to 3,129.0.
Mexico City’s Bolsa index ended 12.81 points higher at 2,273.33.
In other markets, gold fell $1 to $384.90 an ounce, and silver retreated 5.2 cents to $4.45 an ounce on the New York Comex. The dollar finished narrowly mixed.
In commodity markets, cotton rose on an unsubstantiated rumor that China had bought a large amount of U.S. cotton to supply its booming textile industry. July-delivery cotton rose 0.42 cent to 77.47 cents a pound.
Market Roundup, D6
