Bargain Seekers Extend Stocks’ Modest Gains; Bonds Stumble
Investors rummaged for more bargains Tuesday, extending a modest rebound from the market’s recent sell-off even though bonds stumbled again amid uncertainty about inflation and interest rates.
The Dow Jones industrial average traded at a slight loss for much of the session before rallying during the final half hour, rising 53.25 points to 6,609.16. In the last three sessions, the barometer of 30 big U.S. companies recouped about 130 of the 400 points it had lost over the previous five trading days.
Broad-market indicators also finished with modest gains for the third straight session, led again by the battered technology sector.
Even so, analysts remained mostly unimpressed by the market’s attempt to rebound from a steep drop that has sliced as much as 8% off the Dow and the Standard & Poor’s 500 list.
“The buying seems to be going on without a whole lot of conviction behind it, because there’s that fear in the back of everyone’s mind that interest rates might kick up again,” said Thom Brown, market strategist for Rutherford, Brown & Catherwood of Philadelphia, noting the continuing jitters in the bond market, where yields hit a seven-month high last week.
With no major economic data scheduled for this week until Friday’s report on wholesale price levels, investors found few new clues on the inflation front.
But the dollar climbed to 126.52 yen in European trading Tuesday, the highest level since August 1992, before falling back slightly in New York. The rise shattered the previous peak of 124.70, reached just before the meeting of the Group of Seven finance ministers in Berlin on Feb. 8, where participants signaled that the dollar’s rise over the past two years had gone far enough.
Against the mark, another key currency, the dollar was trading late Tuesday at 1.7143 marks, its highest level in a month and about four pfennings above the pre-Berlin peak.
The dollar’s renewed strength is evoking some unease among economists about whether the authorities can keep it under control. Although a strong dollar benefits consumers by lowering the cost of imported goods and overseas travel, it hurts U.S. manufacturers by making their products more expensive--and less competitive--overseas.
Another concern raised by the dollar’s rise is the prospect of a flare-up in trade tensions between Japan and the United States.
As bond prices fell Tuesday, the yield on the 30-year Treasury bond rose as high as 7.12%, matching Friday’s seven-month high, before settling at about 7.10%.
Advancing issues outnumbered decliners by a 6-5 margin on the NYSE, where volume totaled 448.86 million shares as of 4 p.m., about even with Monday’s modest pace.
Goldman, Sachs & Co.’s chief investment strategist, Abby Joseph Cohen, gave stocks a boost by reiterating her optimistic stance on U.S. stocks. She named Citicorp, Chase Manhattan, Intel and Microsoft as some of her favorites.
Among Tuesday’s highlights:
* Prominent among the Dow’s gainers were J.P. Morgan, up 2 1/8 to 101 3/8, and American Express, up 1 3/8 to 61 3/8. Elsewhere on the NYSE, Chase Manhattan rose 2 5/8 to 96 7/8.
NationsBank jumped 2 3/8 to 58 5/8, Citicorp rose 2 3/4 to 114 3/4 and BankAmerica rallied 2 3/8 to 107 1/4.
* IBM, up 4 1/8 at 136 5/8, led the Dow’s advance for the second straight session, continuing to rebound from last week’s worries that the computer maker won’t meet earnings expectations.
* Not all computer-related shares fared well. Motorola fell 1 5/8 to 59 1/2 after saying losses in Iridium will widen by “several hundred million dollars in 1997” as it gets closer to introducing its satellite telecommunications service next year. Motorola owns 24% of Iridium.
Market Roundup, D6
