FINANCIAL MARKETS : DOW Soars; Dollar Falls Against Yen
Blue chip stocks posted large gains for the second session in a row Monday, propelled by more good news about the economy and strength in some economically sensitive shares.
The Dow Jones industrial average rose 33.67 points, exactly the same number as Friday, to end at 3,798.17. In the broader market, advancing issues beat declines 1,416 to 771.
Analysts said the market was buoyed by good earnings reports and news from the National Assn. of Purchasing Management that factory output was increasing more than expected. The group also reported a decline in its price index.
Markets shrugged off news from the Commerce Department that Americans’ personal income rose a scant 0.1% in June, failing to keep up with a 0.4% spending rise.
“It was a very good market on Friday, and it just wasn’t ready to cool off yet,” said George Pirrone, senior trader at Dreyfus Corp. “There’s still a decent amount of short-covering plus some real buying.”
Treasury bond yields were either unchanged or slightly lower, following a decline in the dollar amid U.S.-Japan trade tensions. The Treasury’s main 30-year bond was unchanged at 7.39%.
Analysts said a rally in interest-rate-sensitive utility stocks fueled sentiment that the Federal Reserve would not raise rates as had been expected at this month’s meeting of its policy-setting Federal Open Market Committee.
The Dow Jones utility index closed 3.49 points higher at 189.89.
“The utility stocks are strong again,” Pirrone said. “They’ve been strong over the whole past week. The theme is rates are not going to have to be pushed higher.”
Among Monday’s highlights:
* Crude oil rose to 17-month highs after Nigerian oil unions backed out of talks designed to settle a 4-week-old strike that disrupted the country’s exports. The unions declined to take part in negotiations scheduled for Monday with Nigeria’s military government and said its members would stay off the job until jailed pro-democracy leader Moshood K.O. Abiola, apparent winner of the annulled June, 1993, presidential elections, is released.
Nigerian production, which accounts for 3% of the world’s oil, has fallen by more than 300,000 barrels a day since the strike began last month, and production is nearing a standstill. On the New York Mercantile Exchange, light sweet crude for September delivery rose as high as $20.98 a barrel, the highest since March 5, 1993. The contract settled at $20.55 a barrel, up 25 cents.
The United States imports 700,000 to 800,000 barrels of Nigerian crude daily. Along with the Nigerian labor unrest, recent refinery outages in Britain, Norway and Russia have caused supply concerns.
* The dollar ended modestly lower, recovering partly from a selloff overseas after the Clinton Administration reassured the market that it would not advocate a lower currency to cut America’s trade deficit. The dollar’s fall in Asia followed the breakdown of talks between Washington and Tokyo on Japan’s government procurement contracts.
* Gold prices ended slightly higher. On New York’s Commodity Exchange, gold for current delivery rose 20 cents to settle at $383.20 per troy ounce.
* Although stocks generally rose, the volume leaders on the New York Stock Exchange and on the Nasdaq were two of the day’s biggest losers.
Carter-Wallace headed the Big Board’s list of active issues, tumbling 4 7/8 to 10 3/4 after the company said it sent letters to 240,000 physicians advising that they immediately take their patients off its Felbatol epilepsy treatment because of recent cases of adverse reactions.
Newbridge Networks plunged 13 5/16 to 28 5/8 on Nasdaq after the technology company disclosed that its first-quarter earnings will fall short of expectations.
* Steel stocks rallied on talk that Chrysler Corp. reached supply contract agreements with major steel producers that include price increases of 7% to 10%. USX-U.S. Steel Group gained 1 7/8 to 39 1/8.
* In Tokyo, stocks ended lower after a day of thin trading, with turnover its lowest since May 9. Investors worried by prospects of a higher yen were reluctant to buy. The Nikkei average ended down 178.04 points or 0.87% at 20,271.35. Hong Kong share prices closed sharply higher, but late profit-taking pushed them off their peak. The Hang Seng Index ended up 200.87 points, or 2.12%, at 9,683.68.
* European markets were quiet, and Swiss markets were closed for a holiday. London share prices ended firmer, helped by relief over British authorities’ leaving interest rates unchanged after concerns about base rates surfaced on Friday after a 0.75 percentage point rise in the accepted rate on the U.K. Treasury bill tender. The FTSE 100 ended 14.8 points up at 3,097.4. German shares closed a lackluster bourse session firmer, with activity dominated by U.S. interest in Volkswagen. The DAX index ended at 2,153.79, up 0.33% or 7.15 points on the day.
