FINANCIAL MARKETS : Stocks Rise, Yields Flatten in Advance of Jobs Report
Buyers returned to U.S. stocks on Thursday as bonds stabi lized, awaiting today’s government report on January employment.
One day after the Federal Reserve Board raised short-term interest rates for the seventh time in 12 months, the Dow Jones industrial average gained 23.21 points to 3,870.77.
The broad market also was strong, with winners topping losers by 13 to 9 on the NYSE. In the Nasdaq Stock Market, the composite index jumped 5.33 points to 763.64.
In the bond market yields were mostly unchanged after rising modestly on Wednesday in tandem with the Fed’s half-point rate hike.
The yield on the Treasury’s 30-year bond yield closed unchanged at 7.74%. It had hit a four-month low of 7.69% Tuesday.
Analysts said Wall Street is keeping its fingers crossed that the Fed’s latest rate increase could be its last, and that the economy’s growth now is poised to slow to a more sustainable long-term rate.
But Gregory Nie, analyst at Kemper Securities, warned that a sharper-than-expected rise in U.S. employment figures due today could start stock and bond investors speculating about the next Fed rate hike--which could quickly sour market sentiment.
That worrying process “possibly starts (today) if the numbers are strong,” Nie said.
Meanwhile, Latin American stock markets continued to bounce around, reflecting investor unease despite President Clinton’s massive financial rescue plan for Mexico. In Mexico City, the Bolsa index fell 53.91 points or 2.7% to 1,943.88. The Bolsa had fallen 3% on Monday, rebounded 10.3% on Tuesday then sank 4.6% on Wednesday.
Brazil’s Bovespa stock index lost 2.3% on Thursday while Chile’s key index rose 1%.
Among Thursday’s U.S. market highlights:
* Industrial stocks continued to lead the market after a recent bout of profit-taking. Analysts said the stocks’ rebound reflects faith in a sustained economic expansion. Gainers included Deere, up 2 to 74; Scott Paper, up 3 1/8 to 73 3/4; Reynolds Metals, up 1 1/4 to 52; and W.R. Grace, up 1 7/8 to 40 3/8.
* Some technology stocks also got a second wind. Adobe Systems gained 1 to 29 3/4, Apple surged 1 1/2 to 41 5/8 and Texas Instruments added 1 3/4 to 71 3/8. Also, Intel jumped 1 9/16 to 72 3/16 after it signaled new price cuts on key computer chip lines.
* Fourth-quarter earnings reports continued to move stocks, including conglomerate ITT, up 3 1/2 to 92 1/2 on a strong report, and waste-handler Browning Ferris, which added 1 1/8 to 32 1/4.
But oil field services company Halliburton fell 1 1/4 to 35 despite reporting its best quarterly profit since late 1985.
* Some interest-rate sensitive stocks showed strength, another sign that investors believe rates are near their peaks. First Interstate surged 2 1/8 to 75 7/8, Federal National Mortgage gained 1 1/4 to 73 7/8 and Wells Fargo was up 2 to 150 1/2.
Major overseas stock markets were mostly lower.
In Tokyo the 225-share Nikkei average closed down 135.17 points at 18,604.30 amid concern about the extent of insurance companies’ losses in the Kobe earthquake.
In Frankfurt, the DAX index eased 3.18 points to 2,045.25. But London’s FTSE-100 index was up 17.4 points to 3,034.7.
In Seoul stocks rebounded for a second day, aided by the government’s announcement that it would reduce the supply of new stocks to prop up the market, which has tumbled in recent weeks.
