FINANCIAL MARKETS : Stocks Lift From Their Lethargy
Fervor for economically sensitive stocks plus a powerful rally in selected technology issues hoisted the market to new heights Tuesday.
The buying that lifted Wall Street out of its late-summer lethargy started slowly and gradually gathered momentum as the session progressed. Among the market gauges that broke new ground were the Standard & Poor’s 500, the Nasdaq Stock Market composite, the New York Stock Exchange composite and the American Stock Exchange market value indexes.
The Dow Jones industrial average climbed 22.54 points to 4,670.08, adding to Friday’s 36.98-point surge. The blue-chip average remained below its all-time high of 4,736.29, established July 17, however.
The S&P; 500 rose 5.33 points to 569.17, surpassing the old mark of 565.22 set July 27. The NYSE composite climbed 2.24 points to 305.47, and the Amex’s index gained 1.25 points to 536.91, both beating the highs reached Friday.
Gainers led losers by about 15 to 8 on the NYSE, where volume expanded to 332.66 million shares as of 4 p.m. over Friday’s holiday-stunted 255.73 million shares. U.S. financial markets were closed Monday for Labor Day.
Stocks broke out of a narrow trading range in the afternoon as buyers flocked back to the technology sector. The group, which has been at the forefront of Wall Street’s advance this year, recovered ground lost last week. Nasdaq’s main barometer jumped 19.83 points to a record 1,039.30, exceeding its previous peak of 1,031.29 reached Aug. 18.
Semiconductor shares were among those investors favored. Intel added 2 13/16 to 63 11/16 as more than 7.4 million shares changed hands, making it Nasdaq’s second-most-active issue. On the Big Board, Micron Technology jumped 5 to 81 3/8, Motorola rose 3 1/4 to 77 3/4 and Texas Instruments spurted 4 1/4 to 76 3/4.
Ricky Harrington, senior vice president and technical analyst at Interstate/Johnson Lane, said tech issues overcame concerns that surfaced last week when reports indicated that the huge Magellan Fund, Fidelity’s flagship, was steering away from the group.
“The market weathered that storm, and the technology sector has regained its leadership position,” he said.
Another force working in Wall Street’s favor is mutual funds. Harrington said with the heavy flow of money pouring into funds this summer, professional investors are eager to put the dollars to work in equities well before the third calendar quarter comes to a close.
“There’s a race to get fully invested again this quarter,” he said.
Strength in shares of economically sensitive companies, including car makers, was instrumental in pushing the market’s up trend. The Big Three automobile manufacturers all were active on the NYSE, with Ford up 1 1/8 to 32 3/8, Chrysler up 2 1/2 to 57 1/8 and General Motors up 3/4 to 49 1/4.
Banking stocks also got attention as investors bet on continuing consolidation in the industry. News that NationsBank intends to take over Bank South for about $1.6 billion in stock, or $27 a share, renewed the merger speculation. NationsBank slipped 5/8 to 60 7/8 on the NYSE, and Bank South rose 2 3/16 to 25 7/16. That stock led the Nasdaq volume list.
With little in the way of potentially market-moving data due this week, investors reviewed reports released late last week that enabled the market to emerge from the doldrums.
The bond market rallied on signs that the economy was settling into a moderate growth pattern that promises lower-than-expected inflation.
The yield of the 30-year Treasury bond fell to 6.57% from 6.61% on Friday. In late New York trading, the dollar ended lower against the Japanese yen, edging down to 97.50 from 97.55 late Friday, on speculation that the Japanese central bank would soon lower interest rates.
The dollar drifted lower against the German mark as political and budgetary problems in Spain, Italy and France caused investors to seek refuge in German assets. In late New York trading, the dollar was at 1.4622 German marks, down from Friday’s 1.4630 marks.
Oil prices shot up on fears that Hurricane Luis might damage oil facilities in the Caribbean region, in particular a large refinery in St. Croix, near Puerto Rico, that was damaged six years ago by Hurricane Hugo.
October gasoline surged 1.98 cents to 56.23 cents a gallon at the New York Mercantile Exchange. The jump in gasoline prices helped lift October crude oil 54 cents to $18.58 a barrel. October heating oil rose 1.54 cents to 52.97 cents a gallon.
