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 has recouped about 130 of the 400 points it 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.
The S&P; 500 index rose 3.99 points to 766.12, and the Nasdaq composite index rose 6.02 points to 1,257.37.
The New York Stock Exchange’s composite index rose 1.63 points to 402.31; the American Stock Exchange composite index rose 0.98 point to 561.42.
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. Still, bonds sagged early in the day, pressuring stocks shortly after the open.
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.
* Teradyne rose 2 7/8 to 36 1/8 after the test equipment and software supplier said Harris’ chip unit placed an order for test systems.
* 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.
Earlier, Motorola reported earnings were 6 cents a share better than what analysts expected for the maker of semiconductors and cellular phones. At the same time, orders were less than expected in the first quarter.
* Sensormatic Electronic Corp. fell 1 to 16 1/2 after the Boca Raton, Fla., maker of surveillance systems said it expects earnings per share of 8 cents for the period ended March 31, about half the 15 cents forecast by analysts.
Overseas, Tokyo’s Nikkei stock average rose 1.7%, Frankfurt’s DAX index rose 0.5% and London’s FTSE-100 fell 0.1%.
Market Roundup, D6
