Stocks Manage Rebound as Yields Decline
Wall Street stabilized Thursday after two days of sharp losses, as falling bond yields and some healthy corporate earnings reports brought buyers back.
The Dow Jones industrials rose 32.16 points to 5,065.10, recovering a small portion of their 165-point slide over the previous two days.
In the bond market, yields eased modestly after climbing to three-week highs Wednesday, when federal balanced-budget talks broke down amid sniping between President Clinton and Republican leaders in Congress.
The 30-year Treasury bond yield slipped to 6.15% on Thursday from 6.19% on Wednesday. Plunging oil prices--a deflationary signal--may have helped the bond market.
Many investors stayed on the sidelines, awaiting Clinton’s afternoon news conference, which took place after markets closed. New York Stock Exchange volume shrank to 409 million shares from 498 million Wednesday.
Clinton made no new proposals toward a balanced-budget agreement, though he again insisted that he and Republicans still could resolve their differences and reach a budget pact soon.
House Speaker Newt Gingrich (R-Ga.), however, said some of Clinton’s news conference remarks “made it harder to understand how we can negotiate in good faith.”
In the absence of real news from Washington, investors focused on some heartening fourth-quarter corporate earnings reports.
Among the companies reporting or forecasting better-than-expected results were computer chip maker Xilinx, Internet software maker Spyglass, mortgage insurer MGIC Investment and hotel and gambling firm Hilton Hotels.
Xilinx’s shares surged 3 9/16 to 31 13/16, Spyglass gained 3 1/2 to 42 1/4, MGIC rose 2 1/4 to 53 3/4 and Hilton leaped 4 1/2 to 69.
“As we get further into January and February, you’re going to get far more companies meeting and exceeding [earnings] expectations,” predicted James Weiss, deputy head of equities at money management firm State Street Research & Management.
Nonetheless, some Wall Streeters warned against making too much of Thursday’s market gain. “Things were pounded down so far [Tuesday and Wednesday] that in the absence of any further bad news, the thing just got into this reflex rally, or spring-back,” said Richard McCabe, chief market analyst at Merrill Lynch & Co.
Analysts warned that many more investors may be mulling the idea of taking some profits in their stocks after last year’s sharp gains.
Among Thursday’s highlights:
* Winners topped losers by 14 to 9 on the NYSE and by 21 to 14 on Nasdaq, which some traders said was a good showing but didn’t suggest voracious bargain hunting.
* The Nasdaq composite index posted its first gain of the week, rising 20.89 points, or 2.1%, to 1,011.10, as many beaten-down technology shares rebounded.
Intel surged 2 3/4 to 56 7/8, Sun Microsystems gained 2 7/8 to 42 1/8, FileNet leaped 5 1/2 to 48 1/4 and Microsoft zoomed 4 1/4 to 86 5/8.
In the telecommunications sector, Qualcomm jumped 2 to 40 1/4, Tellabs added 1 1/2 to 35 1/2 and Nokia gained 1 3/4 to 36 1/4.
* Gambling stocks followed Hilton higher. Mirage Resorts jumped 2 1/2 to 38 3/4, Circus Circus was up 1 5/8 to 29 1/2 and MGM Grand rose 1 1/2 to 28 5/8.
* On the downside, investors took profits in some utilities and consumer growth stocks that had held up reasonably well in the latest market downturn.
* Energy stocks were mixed as crude oil prices plummeted on forecasts of above-normal temperatures in the storm-wracked Northeast and Midwest over the next six to 10 days.
Crude oil futures for February plunged 88 cents to $18.79 a barrel at the New York Merc. It was the steepest one-day fall in five years.
Gold pulled back slightly.
Overseas stock markets were mixed ahead of U.S. trading. Tokyo’s Nikkei index lost 1.1%, but Hong Kong and Australian stocks gained--suggesting that some foreign markets may be benefiting from cash exiting U.S. stocks.
