Dow Continues Upward; Bond Yields Rise
The stock market rebound gained momentum Thursday as investors grew less wary of overseas turmoil than missing out on a potential rally back to record levels.
The Dow Jones industrial average rose 101.87 points, or 1.3%, to 7,826.61. Broad-market indexes also posted sizable gains, keeping pace with the blue-chip sector after lagging Wednesday’s advance.
Renewed fears Japan might sell U.S. Treasuries to finance a bailout of its troubled banking system pushed bond prices lower despite encouraging economic news that caused yields to flirt briefly with 6%.
The 30-year Treasury fell $3.13 for each $1,000 in face value. Its yield, which moves in the opposite direction, rose to 6.06%, from 6.03% on Wednesday. The yield touched 6.01% during the day.
Long-term yields haven’t fallen below 6% since Jan. 19, 1996, and investors felt uncomfortable breaching that barrier Thursday without more solid evidence that economic growth was slowing enough to keep the Federal Reserve Board from raising interest rates.
Although the Dow is more than 400 points below its Aug. 6 peak of 8,259.31, popular measures such as the Standard & Poor’s 500-stock index could easily move back to record levels soon if Thursday’s rally packs enough of a tail wind.
The gains came amid signs of a peaceful conclusion to the latest U.S.-Iraqi standoff and renewed optimism for a government-led resolution to Japan’s economic crisis.
With the market’s recovery showing some stamina after numerous setbacks, investors may be growing more concerned about getting caught on the sidelines than about the risk of further turbulence of foreign markets. After a series of misfires, the Dow managed on Wednesday to erase the remaining damage from its 554-point tumble on Oct. 27.
“The market had a real psychological target in recouping everything lost from ‘Gray Monday,’ and now that it closed above that level, we’re setting up for a broad relief rally,” said Robert Froehlich, chief investment strategist for Kemper Funds in Chicago.
The latest developments overseas offered “further evidence that the world is not going to fall apart,” said Peter Canelo, U.S. investment strategist at Morgan Stanley Dean Witter.
Investors were cheered by news that Prime Minister Ryutaro Hashimoto, reversing his stance for the second time this week, said the government may tap public funds to help Japanese banks saddled with billions of dollars in bad loans.
The news helped boost the Nikkei-225 average nearly 3%.
The Dow’s strongest components were 3M, up $2.56 to $96.88; Travelers Group, up $2 to $51; Chevron, up $1.88 to $84.19; AT&T;, up $1.75 to $54.56; and Hewlett-Packard, up $1.75 to $62.88.
The blue-chip barometer still needs to gain about 235 points to fully recover from last month’s decline, a 900-point slide over four sessions that culminated with the 554-point tumble.
By contrast, the Standard & Poor’s 500, which rose 14.39 points to 958.98 on Thursday, is now within 10 points of its pre-plunge level and within 25 points of its Oct. 7 record of 983.12.
Similarly, the New York Stock Exchange composite index, which rose 6.64 points to 500.54 on Thursday, is just 15 points shy of record territory.
The Nasdaq composite index, whose large technology constituency is considered particularly vulnerable to the troubles in Asia, rose 25.34 points to 1,626.56 on Thursday, but is still nearly 120 points, or 7%, from record levels.
Advancing issues outnumbered decliners by more than a 2-1 margin on the NYSE, where volume was heavy, totaling 601.80 million shares, up from 537.05 million on Wednesday.
The Russell 2,000 index of smaller companies rose 5.01 points to 435.70, and small-company stocks dominated the American Stock Exchange, which rose 5.00 points to 672.85.
Among Thursday’s Wall Street highlights:
* Applied Materials, a computer industry bellwether that makes equipment used to produce semiconductors, rose $2.81 to $37.63. The company reported fourth-quarter net income of 47 cents a share after the market closed, beating analysts’ expectations by a penny.
* Disk drive maker Quantum rose $2.44 to $28.56, and Intel gained $1.81 to $80.88. Texas Instruments, which fell from $141 last month to as low as $93.75 last week, surged $5.75 to $103.75.
* Rambus shares soared 42% on expectations that Intel will begin making computer chips that use Rambus technology sooner than expected, rising $17.94 to $60.94.
On European markets, Frankfurt’s DAX-30 index rose 2.1% and London’s FTSE-100 rose 1.6%.
Market Roundup, D7
