FINANCIAL MARKETS : Holiday Rallies : Stocks Up 18.51; Bonds, Dollar Less Spirited
Blue-chip stocks closed with strong gains for the third day in a row Friday as investors snapped up stocks before the long Christmas holiday weekend.
But if stocks were infected by the holiday spirit, the currency and bond markets slipped into a pre-holiday lull.
The Dow Jones industrial average, up more than 34 points at its highest level of the day, retreated on profit-taking to close at 3,833.43, up 18.51.
Broader market indexes also finished under their highs for the day but were still in the positive column.
Advancing issues led decliners by about 4 to 3 on the New York Stock Exchange, where volume was a very light 196.54 million shares. On Thursday 339.67 million shares changed hands.
For a third consecutive session, the U.S. markets benefited from this week’s financial crisis in Mexico, whose government allowed a sharp devaluation of the peso earlier this week. The resulting nose-dive for the Mexican currency and stock market sent investors out of Mexican securities and into U.S. stocks and bonds.
The light volume strengthened the moves, in this case on the upside. “In light volume, you can push stocks up with facility,” said Larry Wachtel, Prudential Securities’ market analyst.
Equities also benefited from a decline in the Treasury long-bond yield. The rate on the 30-year bond dipped to 7.83% from Thursday’s 7.85%, and its price, which moves in the opposite direction, rose 7/32 point, or $2.19 per $1,000 in face value.
Auto stocks attracted bargain hunters for a second consecutive day, and airline shares were also strong performers. Latin American stocks rebounded from the beating they took earlier because of the Mexican peso devaluation.
Among the market highlights:
* Mexican stocks recovered some ground in the U.S. market. Telefonos de Mexico rose 1/4 to 40 7/8, and Grupo Televisa added 1/2 to 32 7/8. Grupo Tribasa rose 1/4 to 19 7/8, but Empresas ICA slid 3/4 to 19 3/8.
* Among the Latin American stocks, Telefonica de Argentina gained 1 3/8 to 51 1/8, and Compania de Telefonos de Chile rose 1 1/2 to 79 1/2.
* General Motors Corp. gained 2 to 41 1/8 after Donaldson Lufkin & Jenrette raised its fourth-quarter earnings estimate for the car maker. Ford Motor Co. tacked on 1/4 to 27, and Chrysler Corp. rose 3/4 to 48 7/8.
* Airline stocks benefited from bargain hunting. Delta Air Lines Inc. surged 3 7/8 to 49 5/8 after a federal judge ruled that the carrier did not breach good faith in negotiating Pan Am’s bankruptcy reorganization plan. American Airlines’ parent AMR Corp. ended up 2 to 53.
Overseas markets ended lower. Mexico’s Bolsa index closed up 39.59 points at 2,341.85. In Frankfurt, the 30-share DAX average ended down 6.64 points at 2,094.01, and London’s Financial Times 100-share average finished 8.3 points lower at 3,083.4. The Tokyo market was closed for the Emperor’s birthday.
The dollar, meanwhile, ended mostly higher in an abbreviated session, deriving strength as investors continued to exchange pesos for dollars amid Mexico’s financial crisis.
In New York, the peso closed at 4.625 to the dollar, down from 4.60 Thursday. The U.S. currency also ended the week at 100.18 Japanese yen, down from 100.23 yen Thursday and at 1.579 German marks, up from 1.575.
DAILY DIARY
Dow Jones Industrials High: 3,860.01 Close: 3,833.43 Low: 3,808.53
New York Volume 196.54 million shares
Interest Rates 30-year T-Bond: 7.83% 1-year T-Bill: 7.16%
Market Roundup, D3
