Dow Continues Climb; Dollar Closes Mixed
Stocks posted solid gains Thursday, boosted by higher technology and transportation issues and falling long-term bond yields.
The dollar finished mixed, falling modestly against the German mark but surging against the Japanese yen.
The Dow Jones industrial average rose 26.09 to 3,758.98. In the broader market, advancing issues outnumbered declining ones by nearly 3 to 2 on the New York Stock Exchange, where volume totaled 307.35 million shares, down from 337.67 million Wednesday.
Broad-market indexes also closed higher, pulled up by technology issues. The NYSE’s composite index rose 1.43 to 252.16, while the Standard & Poor’s 500 index rose 2.80 to 456.49. The Nasdaq composite index of mostly smaller stocks rose 5.21 to 727.11.
Transportation stocks rose following reports that Kansas City Southern is trying to sell its railroad business for as much as $2 billion. Kansas City rose 2 1/2 to 45 1/2. Railroad stocks rose in sympathy, pulling the Dow transportation average up 24.50, or 1.54%, to 1,618.86.
Traders began the day nervous that the market could lose the momentum that had been built by a nearly 50-point rise Tuesday, after the Federal Reserve Board tightened interest rates. But they were encouraged as the day wore on, and investors, spurred by a firming in bonds, moved in as buyers about midday and kept on buying.
Stocks weakened in the early going after bonds lost ground on stronger-than-expected economic news. The Dow industrials fell more than 8 points before recovering.
Bonds fell about 1/4 point but then began to recover in late morning, putting a floor under stocks and enticing buyers into the market.
At the close, the Treasury’s main 30-year bond yield was 7.23%, down from its previous close of 7.27%, while its price closed up 3/8 point, or $3.75 per $1,000 in face value. Prices and yields move in opposite directions.
But bonds snapped back about midday, and that gave stock investors the confidence to begin buying.
The dollar rose against the yen following statements by U.S. Trade Representative Mickey Kantor indicating hope that preliminary discussions with Japanese officials will lead to a full resumption of the stalled “framework” talks on reducing Japan’s huge trade surplus.
In New York, the dollar rose to 104.25 Japanese yen from 103.50 on Wednesday. It fell to 1.6540 German marks from 1.656.
Among the market highlights:
* Technology stocks were very strong for the second consecutive day, helped by Micron, which rose 1 1/2 to 33 7/8 after a Wall Street Journal article said it might escape the general slowdown in computer industry growth.
IBM, which staged a technical breakout Tuesday by piercing resistance at 60, rose 5/8 to 61 3/8.
DSC Communications Corp. fell 8 11/16 to 49 1/16 in heavy trading. Analysts said the stock dropped amid disappointment that the company did not get part of Bell Atlantic Corp.’s network building contract.
* AT&T; led the volume on the NYSE, rising 1 3/8 to 56 5/8. Along with General Instrument, the telephone giant was chosen by Bell Atlantic to furnish a new media network system. General Instrument rose 4 1/4 to 59 1/8. Bell Atlantic added 1/9 to 53 7/8.
* In the paper group, International Paper gained 1 7/8 to 68 3/8, Georgia Pacific gained 3 3/8 to 63 1/2 and Temple Inland was ahead 1 3/8 to 50 5/8.
* Chrysler, which raised its dividend, gained 3/4 to 47 1/4.
* Tobacco stocks slumped after reports that 50 law firms had committed $100,000 apiece to finance a class-action suit on behalf of people addicted to cigarettes. Philip Morris fell 1 3/4 to 51 1/4; American Brands lost 3/8 to 30 3/4.
Stocks were mixed in overseas trading. Frankfurt’s DAX 30-share average ended at 2,247.76, down 19.65 points on the day, while Hong Kong’s Hang Seng index fell 121.66 points to 9,354.98 after surging 432 points Wednesday.
In Tokyo, the Nikkei 225-share average closed at 20,221.34, up 68.61 points. London’s Financial Times 100-share average gained 6.3 points to close at 3,122.8.
Mexico’s Bolsa index ended up 29.73 points at 2,404.91.
In other markets:
Crude oil rose 46 cents to $18.45 a barrel on the Merc, while soybean futures retreated moderately on the Chicago Board of Trade as traders took profits from Wednesday’s steep gains.
Market Roundup, D6
