Dow Gains 86; Broad Market Finishes Mixed
U.S. blue chip stocks on Thursday recouped more than half of Wednesday’s losses, but the broad market ended mixed even as bond yields fell to a 21-month low.
Many foreign markets stabilized after their renewed drubbing of recent days.
On Wall Street, the Dow Jones industrial average ended up 86.44 points, or 1.1%, at 7,487.76, bouncing back from the previous day’s 157-point slide.
But the buying didn’t filter through to the broader market. Losers outnumbered winners by 1,510 to 1,446 on the New York Stock Exchange and by 2,238 to 1,959 on Nasdaq.
The Nasdaq composite index rose less than the Dow, adding 16.02 points, or 1%, to 1,557.74.
Trading was heavy.
Stocks rallied early in the day, then fell sharply at midday before rising again in afternoon.
Analysts said investors didn’t show much reaction to Federal Reserve Board Chairman Alan Greenspan’s testimony to Congress. He said Asia’s economic woes will have some negative effect on the U.S. economy, but he didn’t quantify it.
Concerns about a potentially deep economic slowdown ahead have weighed on stocks in recent sessions, as many foreign markets have suffered heavy selling again.
But on Thursday most Asian markets closed little changed. And Latin American markets, which tumbled early in the week, rallied more than the Dow. Brazil’s key market index gained 3.2% after diving 10.2% on Wednesday, in the wake of the government’s plan to slash spending and slow economic growth.
Meanwhile, expectations of slower growth worldwide helped push bond yields down.
The yield on the Treasury’s benchmark 30-year bond fell as low as 6.07% in midday trading. The yield rose slightly by the end of the trading day and finished at 6.09%, down from 6.10% on Wednesday, and a new 21-month low.
Scott Colbert, who manages about $2.8 billion at Commerce Bank Investment Management Group in St. Louis, Mo., also noted that bonds have been viewed as a safe haven from recent turmoil in world equity markets.
Many analysts say stock prices may have further to fall, as investors take profits on concerns that corporate earnings growth in 1998 won’t meet expectations because of the effects of Asia’s economic slump.
“We could break the lows we made today; I don’t see us at 7,000 but I do see us at 7,250” on the Dow, said Scott Bleier, chief investment strategist for Prime Charter Ltd.
“That would scare a lot of people and help break down some of this complacency, which could set the stage for a year-end rally,” he said.
Among Thursday’s highlights:
* Blue chips gains included General Electric, up $2.63 to $68.19; IBM, up $2.50 to $99.13; and Merck, up $1 to $87.94.
* Tech issues rebounded strongly. Texas Instruments, which fell at low as $90 during trading, ended up $3.75 at $97.50. Intel gained $3 to $77.94, Applied Materials was up $2.31 to $31.13 and Compaq Computer jumped $4.25 to $62.25.
* Westinghouse Electric rose $1 to $28.88 after a person familiar with the situation said the company is poised to sell its conventional power-generation units to Siemens, a German electronics and engineering company, for $1.5 billion.
* Many telephone utility stocks continued to rise, as investors sought more “defensive” stocks. AT&T; rose $2 to $48.75, GTE gained $1.38 to $46.13 and Ameritech rose 81 cents to $70.44.
The dollar was mixed against other major currencies, dropping from the previous day’s six-month high against the Japanese yen on worries that Tokyo authorities would move to push the dollar lower. In late New York trading, the dollar was quoted at 126.07 yen, down from 126.32 on Wednesday. The dollar also was changing hands at 1.7243 German marks, up from 1.7183.
