FINANCIAL MARKETS : Dow Soars, Bonds Stable; Dollar Eases
Another rally in industrial stocks lifted the broad market for a second consecutive session Monday, as bond yields held steady despite some healthy economic reports.
The Dow Jones industrial average rose 33.67 points--exactly the same point gain as Friday--to end at 3,798.17, highest since June 16.
Winners outnumbered losers by nearly 2 to 1 on the New York Stock Exchange, in a sign of investors’ renewed interest in stocks.
The market had jumped Friday as bond yields plunged, after the government reported surprisingly weak growth in second-quarter gross domestic product.
On Monday, the bond rally failed to follow through. Yields rebounded early in the day after a strong report on the nation’s factories, but fell back later to close mostly unchanged. The yield on the Treasury’s 30-year bond ended at 7.39%, the same as Friday.
The bond market was in part pressured by another fall in the dollar, after the United States began long-awaited trade sanction proceedings against Japan.
The dollar closed in New York at 99.28 Japanese yen, down from 100.20 on Friday but up from Tokyo’s Monday close of 98.77.
Still, analysts noted that the bond market was more focused on Monday’s economic reports, where the news was mixed.
Growth at the nation’s factories last month was stronger than many analysts had expected, according to the National Assn. of Purchasing Management’s latest survey.
That raised new concerns about potentially higher inflation in the economy, which could encourage another round of credit tightening by the Federal Reserve Board.
But other reports Monday, such as on June consumer spending, hinted at slower growth.
Among Monday’s highlights:
* Industrial stocks led Wall Street’s rally, as they did Friday, suggesting that many investors don’t believe the economy is headed for a serious slowdown.
Steel shares surged, in part over expectations that auto makers will agree to pay significantly higher prices for steel in 1995. Inland Steel leaped 2 1/4 to 40 1/4, USX-U.S. Steel gained 1 7/8 to 39 1/8, LTV jumped 1 to 19 3/4 and Rouge Steel surged 1 7/8 to 32 3/8.
* Among other industrials, Caterpillar rose 1 1/2 to 109 7/8, Union Carbide gained 1 1/2 to 29 3/4, Georgia-Pacific jumped 1 3/8 to 65 7/8 and Inco was up 1 to 28 1/2.
* Oil stocks were up as crude prices hit 17-month highs, after Nigerian oil unions backed out of talks designed to settle a 4-week-old strike that has disrupted the country’s exports.
On the New York Merc, crude futures for September rose as high as $20.98 a barrel, the highest since March 5, 1993. The contract settled at $20.55, up 25 cents.
Among oil stocks, Exxon rose 5/8 to 60 1/8, Mobil jumped 1 3/8 to 85 1/4 and Unocal was up 3/4 to 29 3/4.
* Utility stocks rebounded, a sign that some investors side with the Wall Street camp that sees interest rates going lower. The Dow utility index jumped 3.49 points, or 1.9%, to 189.89.
* Among the day’s big losers, Newbridge Networks plunged 13 5/16 to 28 5/8 after the computer networking firm said the recent quarter’s earnings will fall short of expectations. Newbridge’s announcement had a dampening effect on some other tech stocks.
Overseas, Tokyo’s Nikkei index lost 178.04 points to 20,271.35 as the dollar weakened.
But Hong Kong shares rocketed, with the Hang Seng index up 200.87 points to 9,683.68. In China, the Shanghai exchange’s official ‘A’ share index soared 36.1% after authorities decided to halt new share listings, coping with a glut of securities.
In London, the FTSE-100 index added 14.8 points to 3,097.4. In Frankfurt, the DAX index inched up 7.15 points to 2,153.79.
