Dow Closes a Rough Month, Rises 46.98
A tame economic reading helped lower interest rates in the bond market, lifting stocks Wednesday. But investors, fearful of the unexpected in the week’s remaining economic reports, continued to favor blue-chip issues and shied away from more speculative shares.
The Dow Jones industrial average rose 46.98 points to 5,528.91, the blue-chip measure’s first close above 5,500 since the market’s steep sell-off two weeks ago on inflation and corporate profit worries. But overall, July was the worst for U.S. stocks in more than two years.
Broad-market indexes posted more modest gains after a shaky start.
“The signs are that the economy is not running away, so the onus is not on the Fed to make a move on rates in the near term,” said Art Hogan, head of institutional equity trading at Dean Witter Reynolds Inc.
“The market is concerned about liquidity in smaller names. We learned in July that sometimes we have to sell these things,” said David Shulman, chief market strategist at Salomon Bros.
For the second-straight session, stocks took their cue from the bond market, where growing optimism for mild inflation helped send long-term interest rates back below 7%, with the 30-year benchmark Treasury bond closing at 6.96%.
Bond traders, concerned about inflationary trends that would make fixed-income investments less valuable, were heartened by news that a survey of purchasing managers in northern Illinois and northwestern Indiana, one of the nation’s largest industrial regions, suggested some moderation in the manufacturing sector’s growth.
The Chicago survey is often monitored for clues on what a widely watched national survey of purchasing managers will show today.
Advancing issues outnumbered declining issues by nearly a 7-4 margin on the New York Stock Exchange, where volume totaled 402.52 million shares as of 4 p.m., up considerably from Tuesday’s sluggish pace.
Despite the day’s advance, however, the jitters that now seem to build before every monthly employment report continued to restrict the market’s enthusiasm. The report has spurred steep sell-offs four times since March by fanning fears of inflationary growth in new jobs and hourly wages. The data on July’s job market will be reported Friday morning.
Among market highlights:
* Gold mining stocks rose as bullion prices jumped to a four-week high in response to a sharp drop in the dollar. Newmont Mining rose 3 3/8 to 49 3/8, Battle Mountain Gold added 1/2 to 9 1/8 and Newmont Gold was up 3 3/4 to 50 7/8.
On New York’s Commodity Exchange, August gold ended up $3.10 at $387.50 an ounce.
* AT&T; rose 1 1/4 to 52 1/8. The FCC is expected today to adopt rules opening up the local phone market to cable TV operators, long-distance carriers, utilities and others.
* Chrysler rose 7/8 to 28 3/8, General Motors added 1/2 to 48 3/4 and Ford rose 1/2 to 32 1/2 amid Wall Street expectations that the rate of new car and light truck sales will increase by between 3% and 4% in July versus a year ago.
* Saks Holdings, the owners of upscale retailer Saks Fifth Avenue, added 2 to 31 after Goldman upgraded its opinion of the stocks.
Overseas, Tokyo’s Nikkei stock average fell 0.9%, Frankfurt’s DAX index rose 0.6% and London’s FTSE-100 rose 0.9%.
Cotton futures closed higher on speculative buying as traders kept a nervous eye on Typhoon Herb in China. Flooding has already hurt crops in China, including cotton.
December cotton at the New York Cotton Exchange closed 0.49 cent per pound higher at 73.79 cents.
Coffee prices also rose on worries of storm damage to the Costa Rican crop, but producer nation selling weighed on the rally late. September coffee closed 1.15 cent per pound higher at 106.40 cents, well off the day’s high of 108 cents.
Costa Rica supplies about 2% to 3% of the world’s total output.
Market Roundup, D6
