Dow Advances 53 as Stocks Continue Rally
Stocks rose for a second straight session Tuesday as the Federal Reserve Board, as expected, held interest rates steady.
The Dow Jones industrial average rose 53.72 points to 7,976.31, after jumping 84 points Monday. Traders said relative calm in Asian markets and benign U.S. inflation data also contributed to the mood on Wall Street.
Technology stocks, battered last week, recovered, with the technology-heavy Nasdaq composite index rising 16.44 points to 1,553.00.
Advancing issues outnumbered decliners by an 11-8 margin on the New York Stock Exchange in fairly heavy trading.
Broader market indexes were higher. The Standard & Poor’s 500-stock list was up 4.65 points at 968.04, and the NYSE composite index was up 2.63 points at 506.75.
The Fed decision on interest rates was greeted with yawns on Wall Street. Analysts said policymakers at the central bank were waiting to assess the effect of Asia’s economic woes on the U.S. economy.
The central bank’s decision came after fresh government reports indicated that inflation remains tame. The consumer price index rose 0.1% in November, half the rise economists had expected.
Traders said they are still watching the developments in Asia. On Tuesday, Japan’s ruling Liberal Democratic Party announced a package of measures to stimulate the country’s struggling economy.
“At least short-term, you’re seeing some relief” from bearish news out of Asia, “but I’m not really so convinced that this whole thing is over,” said James Volk, co-director of institutional trading at Jensen Securities.
In the bond market, the yield on the benchmark 30-year Treasury bond fell to 5.96% from 5.97% on Monday.
Much of the focus Tuesday was on the renewed life in technology stocks, which suffered sharp losses in the last week amid profit warnings from some leading companies and concerns that the economic crisis in Asia would hurt the group’s growth.
“I think the high-tech stocks have been pummeled enough that they’re probably going to have a little rally now too,” said Harry Laubscher, market analyst at Tucker Anthony.
IBM led the Dow’s gainers, rising $2.88 to $103.75. Dell Computer gained $3.56 at $87, and Compaq Computer rose $2.88 at $57.38.
Solectron surged $6 to 35.75 after the head of the manufacturing services company told the CNBC cable network that internal investment--not Asian sales troubles--caused the company to fall short of analysts’ earnings forecasts.
Cisco Systems gained $2.63 to $80.13.
Among Tuesday’s highlights:
* Steady-growing companies perceived as “safe” in the midst of Asian economic turmoil climbed to record peaks. General Electric rose 81 cents to $75.44 after Chief Executive John Welch told analysts that the company will boost its cash to about $5 billion in 1998 and streamline GE Capital’s operating costs.
Procter & Gamble, up 55% this year, rose $2.63 to $83.38.
In commodities trading, gold for January delivery fell $1.10 to $283.40 an ounce at New York’s Commodity Exchange. February crude oil was unchanged at $18.17 a barrel at the New York Mercantile Exchange.
Overseas, London’s FTSE-100 index rose 1.6%, and Tokyo’s 225-share Nikkei average closed up 0.5%.
Market Roundup, D8
