Dow Rebounds as Overseas Trading Is Calm
Stocks jumped Thursday as investors, soothed by calm in overseas markets, shopped for bargains after Wednesday’s drubbing.
The Dow Jones industrial average ended up 86.44 points, or 1.1%, at 7,487.76, bouncing back from the previous day’s 151-point fall. The index traded briefly below the psychological support of 7,400, slipping to 7,349.99 before rebounding.
In the broader market, declining issues led advances 1,478 to 1,413 on active volume of 642 million shares on the New York Stock Exchange.
The Nasdaq composite index rose 16.02 points to 1,557.74.
Bond yields fell in response to the Labor Department’s report on third-quarter nonfarm productivity, with the yield on the Treasury’s benchmark 30-year bond falling 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.
The stock market gains came as overseas markets held stable after this week’s pounding and amid brewing tensions between the United States and Iraq over arms inspectors.
Analysts said many buyers could not resist as stocks neared their end-of-October lows, when the Dow was at 7,400. On the first trading day of November, the average shot up 232 points.
“People were really looking for the bargains and the concern is that the market could snap back off the recent sell-off,” said Bill Meehan, chief market strategist for Cantor, Fitzgerald & Co. in Beverly Hills.
The gains came despite comments by Federal Reserve Board Chairman Alan Greenspan, who told Congress that the currency turmoil in Southeast Asia has had only a modest impact on the U.S. economy so far but could mute export growth.
Although share prices fell sharply Thursday in the Philippines and Singapore, Japanese stocks managed to rally back from an early 1.6% drop and finish just a shade lower. In Hong Kong, stocks rose 1.2%.
Wall Street was also comforted by a recovery in Brazil’s battered stock market. The country’s leading stock index closed with a 3% gain, reversing the previous day’s 10% slump.
The Standard & Poor’s composite index of 500 stocks rose 10.70 points to 916.66. The American Stock Exchange index fell 1.18 points to 666.86.
The NYSE composite index of all listed common stocks rose 3.76 points to 480.69. The average share was up 34 cents.
Among Thursday’s highlights:
* Blue chips rose, with General Electric up $2.63 to $68.19, IBM up $2.50 to $99.11 and AT&T; up $2 to $48.25.
* Technology stocks rallied strongly. Texas Instruments, which at one point had been sharply lower, closed with a gain of $2.75 at $96.50. Intel rose $3 to $77.94; Applied Materials was up $2.31 to $31.13. Compaq Computer jumped $4.25 to $62.25, but 3Com dropped $1.50 to $29.19.
* Walt Disney rose $1.81 to $84.88 after Euro Disney, which is 39.2%-owned by Disney, said its profit for fiscal 1997 rose a greater-than-expected 7.5%.
* Westinghouse Electric rose $1.19 to $29.06 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.
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.
Crude oil rose 21 cents to $20.70 a barrel on the New York Mercantile Exchange as tensions escalated between Iraq and the United Nations.
