FINANCIAL MARKETS : Dow Rises 21.87 on GOP Prospects
Stocks rallied Tuesday as Wall Street bet that the Republican Party, viewed as more friendly to Wall Street, would make strong Election Day gains.
The market was also aided by a retreat in long-term interest rates, which fell on news of surprisingly weak retail sales, after a strong showing at the Treasury’s auction of three-year notes. But the dollar edged lower as the currency markets were nervous about the outcome of the elections.
The Dow Jones industrial average rose 21.87 points to 3,830.74, with advancing issues narrowly outnumbering declines on the New York Stock Exchange.
In the credit markets, the Treasury’s key 30-year yield fell for the first time in six days, closing at 8.12%, down from 8.16%. Its price, which rises when yields fall, was up 7/16 point, or $4.38 per $1,000 in face value.
The Treasury sold $17.2 billion in three-year notes at a yield of 7.41%, which analysts said was roughly in line with expectations and reflected satisfactory market demand for the notes.
As bond prices rebounded, market speculators who had bet on a drop in prices Tuesday were compelled to join the buying spree, giving a further boost to the market run-up.
The dollar declined in cautious trading as currency dealers avoided taking new positions, uncertain over how the results would affect the currency market.
In New York trading, the dollar closed at 1.509 German marks, down from 1.516 on Monday. The greenback ended at 97.13 Japanese yen, down from 97.33.
Besides rising on general optimism, the stock market performed as it often does after a sharp decline, rebounding as investors bought shares that tumbled in last week’s more than 3% decline in the Dow average, said Michael Metz, managing director at Oppenheimer & Co.
Technology stocks performed particularly well, Hays said, amid expectations that a key indicator for the semiconductor industry and the entire technology industry--the book-to-bill ratio--would be strong for October. The ratio measures orders and shipments for U.S. semiconductor companies.
Among broader market indicators, the NYSE’s composite index rose 0.99 point to 255.28. The Standard & Poor’s 500-stock index rose 2.58 points to 465.65, while the Nasdaq composite index rose 5.23 points to 767.54 on the back of strong technology stocks. At the American Stock Exchange, the market value index rose 0.64 point to 451.05.
Volume on the floor of the Big Board came to 289.14 million shares, up from 256.20 million in the previous session.
Among the market highlights:
* Kemper rose 3/4 to 51 on reports that four financial services firms, including Dean Witter Discover & Co., were exploring a takeover of the company. Last week, Canseco Inc. reduced its offer for Kemper to $60 a share from $67.
* Lotus Development and Hewlett-Packard said they agreed on a broad strategic alliance. Hewlett-Packard, also boosted by bullish comments from Salomon Bros., rose 1 3/8 to 98. Lotus gained 3/16 to 38 3/16.
* Unum tumbled 6 3/8 to 40 1/4 after posting a third-quarter loss and taking an unexpectedly large charge.
* Trico Products, a maker of windshield-wiper systems, surged 20 1/2 to 81 1/2 on news that it was being acquired by Stant Corp. at $85 a share. Stant rose 1 1/4 to 14.
* Piper Jaffray dropped 7/8 to 9 3/4 after it reported a drop in its fourth-quarter profit and cut its quarterly dividend.
* Technology stocks rose, including Microsoft, which rose 1 3/4 to 63 5/8; Apple Computer, up 1 1/2 to 42 1/2, and Applied Materials, up 3 to 51 1/4.
* Southwest Airlines fell 1 3/8 to 21 7/8. The company forecast that fourth-quarter profit would be below year-ago levels.
Stocks ended mixed abroad. Short-covering pushed prices higher in Frankfurt, with the DAX 30-share average rising 9.92 points to 2,053.44. Tokyo’s 225-share Nikkei average ended at 19,609.02, down 10.20 points. In London, the Financial Times 100-share average lost 2 points to close at 3,063.8. Mexico’s Bolsa index gained 23.59 points, closing at 2,611.94, about four points off its session high.
Market Roundup, D8
