Stocks Post Broad Gains; Coffee Surges
In stark contrast with other, seemingly halfhearted efforts to rebound from its recent slide, the broad market kept pace with the blue-chip sector in Tuesday’s powerful market rally. Stocks also surged in Europe.
Meanwhile, in other markets, coffee prices rose sharply after roaster Folgers Coffee raised its retail prices, signaling more worries about this year’s supplies. And the dollar fell sharply against the German mark as U.S. interest rates fell.
The Dow rose 179.01 points to 6,962.03 on Tuesday, as the Standard & Poor’s 500-stock list gained 21.09 points to 794.05 and the NYSE’s composite index rose 9.93 points to 413.62. The Nasdaq composite index rose 25.60 points to 1,242.63.
Last Tuesday’s 173 point gain in the Dow was accompanied by only slight gains in the S&P; 500 and Nasdaq composite.
“It’s a very high-quality rally today. I’m impressed,” said A. Marshall Acuff Jr., a market strategist at Smith Barney, noting that four issues rose for every one that fell in heavy trading on the New York Stock Exchange. “We have great breadth. No one can complain about that today.”
At one point Tuesday, the Dow was up nearly 188 points, which would have been enough to beat its one-day point record of 186.84, which was set two days after the Black Monday crash of 1987. Instead, it was the third Tuesday in a row that the Dow broke the record for its second-biggest point gain.
Among Tuesday’s highlights:
* The Dow’s biggest gainer was IBM, which surged 8 to 158 3/8 after the computer maker boosted its dividend and approved a new stock buyback plan.
Financial services issues, which enjoy a bigger profit margin when interest rates fall, also figured prominently in the Dow’s advance: Travelers Group rose 4 3/4 to 55, J.P. Morgan rose 2 1/2 to 100 5/8 and American Express rose 2 3/4 to 66 7/8.
The Dow’s other big gainers were DuPont, up 4 3/8 to 107, and Procter & Gamble, up 3 1/8 to 127 3/4.
* Other interest-rate sensitive issues rose as well. BankAmerica advanced 4 3/4 to 115 1/4, Chase Manhattan gained 2 3/4 to 90 1/2, Citicorp added 4 3/4 to 112, NationsBank was up 2 1/8 to 59 7/8 and Bank of New York jumped 2 3/4 to 39 7/8.
* The technology-laden Nasdaq was propelled by Intel, up 3 5/8 to 150, and Microsoft, up 4 1/8 to 119.
One of the few tech losers was CoreStaff, down 4 1/2 at 18 3/4, whose rating was cut by Alex. Brown despite better-than-expected quarterly results.
* Strong quarterly results drove ITT up 3/4 to 58 3/4 and PepsiCo up 3 1/8 to 34 3/8.
* After a halt in trading Monday, McDermott International fell 2 1/4 to 18 3/4 after it said it expects to report a loss from operations as large as $90 million in its fourth quarter. Its majority-owned subsidiary, J. Ray McDermott, fell 4 7/8 to 17 5/8.
Overseas, London stocks jumped to their highest level in six weeks, encouraged by sharp gains in New York. The FTSE 100 index added 43.5 points, or 0.99%, to close at 4,433.2. Frankfurt shares also rose, with the DAX index adding 20.13 points to 3,383.19, and in after-hours trading surged to 3,425.86.
Tokyo financial markets were closed for a holiday.
The dollar fell sharply against the German mark after the surprisingly weak U.S. manufacturing and wage data diminished prospects for another rise in interest rates soon, dealers said.
The dollar settled at 1.7243 marks, down from 1.7330 Monday. The dollar cost 126.87 yen, down from 126.98. The pound cost $1.6316, up from $1.6247.
The retreat marked the first time since April 23 that the dollar has fallen broadly, and eroded gains made after leaders of the Group of Seven industrialized nations signaled during a weekend summit that they weren’t yet ready to take aggressive steps to halt the currency’s rise.
The rise in coffee prices was Folgers’ third in the last two months, bringing the total rise since then to 80 cents a can, a 35% increase.
“The list price of Folgers coffee generally reflects the price of green coffee sold on the commodity market,” Folgers said in a statement after it raised its list price for a standard 13-ounce can of ground coffee by 20 cents to $3.06.
“Green coffee prices have been rising since January, and have continued due to a number of factors including reduced crop estimates for the upcoming harvest in Brazil, reduced availability of coffee from Central America and Colombia, and the generally tight supply of arabica beans on the worldwide coffee market,” said Folgers, a unit of Procter and Gamble.
Bolstered by Folgers’ move, coffee for May delivery on the Coffee Sugar and Cocoa Exchange in New York closed 6.15 cents a pound higher at 226.40 cents, just below the 2 1/2 year high of 227.50 cents set in early March.
