Dow Rebounds 54.30 as Dollar Surges to 7-Week High Against Yen : Markets: Analysts credit technical factors for the broad advance in stocks. The long bond closes unchanged.
Stocks came roaring back Monday in a rebound inspired by internal market forces and confidence in the economic outlook.
Market watchers credited technical factors for much of the buying that hoisted the Dow Jones industrial average and broader gauges sharply higher.
The surge in the Dow grew so pronounced by midafternoon that it triggered New York Stock Exchange restrictions on certain computer-guided trading. The Dow finished with a 54.30-point gain, closing at 4,395.63.
Market measures for a wider range of stocks also advanced: The NYSE composite climbed 2.03 points to 281.52, Standard & Poor’s 500-stock index rose 4.46 points to 523.65, the Nasdaq composite index spurted 6.86 points to 871.18, and the American Stock Exchange market value index added 1.47 points, rising to 489.17.
Advancing NYSE stocks beat decliners by about 3 to 2. The market’s rebound came on Big Board volume of 286.26 million shares, down from 356.43 million on Friday.
In regaining much of the ground lost last week, stocks built on a trend that developed Friday following the selloff suffered Thursday when the Dow plunged nearly 82 points. Blue chips dug out of a deficit Friday to finish with a tiny gain, while a wide range of other stocks ended mixed.
Analysts said Thursday’s retreat was strictly related to the expiration of options, which took place on Friday. Typically, the market becomes more volatile when the options expire.
Monday’s renewed fervor for equities didn’t stem from any particular source. It couldn’t be explained by any important economic news because no reports of significance were due until later in the week.
Market analysts said it was simply a case of investors deciding that last week’s declines presented opportunities to buy stocks at reduced prices.
Growing confidence in the economy provided a favorable backdrop for equities. On the eve of a Federal Reserve policy meeting, the central bank was believed content to keep interest rates steady for the time being because inflation seems to be under control.
Bill Allyn, director of equity trading at Jefferies & Co., said faith in the so-called “soft landing” scenario helped restore investors’ interest in buying stocks. It is widely assumed that interest rate hikes engineered by the Fed starting in early 1994 succeeded in slowing the economy to a non-inflationary rate of growth.
The dollar meanwhile, surged to a seven-week high against the Japanese yen Monday, amid optimism that the tough U.S. stance against Japan in a trade dispute eventually will help cut the bulging American trade deficit.
The U.S. currency also got a boost from a slide in the Japanese stock market over concerns that Japan’s economy needs more time to recover from a long slump.
The U.S. currency closed in New York at 87.33 Japanese yen, up from 86.85 yen Friday. It also was changing hands at 1.441 German marks, down from 1.446.
A perception that the bond market’s rally could be running out of steam might have steered some investors toward equities and away from fixed interest-bearing instruments.
The Treasury bond market ended mixed in light trading Monday, with most traders and investors refraining from major transactions in the absence of fresh economic news.
At the close, the key 30-year Treasury bond yield was unchanged from Friday at 6.92. Its price, was up 1/32 point, or 63 cents per $1,000 in face value.
Among Monday’s highlights:
* Technology stocks were among the issues leading the market higher and several studded the lists of active stocks on all the major exchanges. Intuit plunged 12 1/2 to 62 as investors dumped the stock in response to Microsoft’s abandonment of its attempt to buy Intuit due to government antitrust opposition to the deal. Microsoft rose 1 7/8 to 87 1/4.
* Acquisition news spurred buying. Puritan-Bennet jumped 7 1/4 to 33 3/8 in response to news that the company was merging with Nellcor in a deal valued at about $475 million. Nellcor fell 1 5/8 to 39 5/8.
* United Healthcare fell 1 3/8 to 36 1/2 after Cowen & Co. cut its earnings estimates on the company, citing concern about its revenue growth.
* Centocor fell 2 5/8 to 13 5/8 on disappointment that it will continue the trial of its flagship anti-clotting drug Reopro instead of ending it early as investors had hoped, analysts said.
* Republic Waste rose 3 7/8 to 7 3/4 after news that former Blockbuster Entertainment chief Wayne Huizenga plans to buy six million newly issued shares of the company.
* EMC rose 2 1/8 to 22 on expectations that the company will introduce some new storage products for the fast-growing networked computing market.
Overseas, Mexico’s Bolsa index jumped 78.62 points to 2090.88.
Tokyo’s 225-share Nikkei average tumbled 351.73 points 15,789.12. In Europe, Frankfurt’s 30-share DAX average ended up 18.04 points at 2,083.17, while in London, the Financial Times 100-share average finished 23.5 points higher at 3,284.5.
