Dow Gains 127 as GE’s Outlook Lends Some Sparkle
Blue-chip stocks rallied on Tuesday, ending a four-session losing streak, as General Electric rescued Wall Street from a series of bleak earnings forecasts.
But the broad market’s gains were limited, as smaller stocks lagged big stocks’ advance.
In other trading, the dollar rose against major currencies after a top Japanese economic official said the recent strength of the yen was hurting his country’s economy.
On Wall Street, the Dow Jones industrial average ended up 127.70 points, or 1.5%, at 8,823.30, recouping all of Monday’s 126-point slump.
The Nasdaq composite index, which sank 62 points Monday, ended up 45.68 points, or 2.3%, at 2,012.60, as major tech stocks revived and Internet shares soared.
But in the broader market advancing issues led decliners by a narrow 16-15 margin in active trading on the New York Stock Exchange.
GE, one of the 30 Dow stocks, buoyed sentiment in the blue-chip market by projecting solid earnings growth in 1999. The stock surged $6.31 to $93.13.
GE’s announcement was an important psychological boost for Wall Street, which has been hurt in recent sessions by warnings of profit shortfalls at such giant companies as Merck, Coca-Cola and J.P. Morgan.
“There’s just been so much negative sentiment out there lately, people tend to exaggerate the impact of any good news,” said Conley Turner, an analyst at Wall Street Strategies.
Stocks also were hammered Monday by fears that President Clinton’s impeachment in the U.S. House is a foregone conclusion, forcing a Senate trial.
On Tuesday, however, buyers returned--at least to blue chips.
Smaller stocks were laggards. The Standard & Poor’s SmallCap stock index gained just 0.3% to 161.67. Winners had only a narrow margin over losers on Nasdaq.
Analysts said that, despite GE’s announcement, many U.S. companies are facing difficulty boosting earnings in the near term because of overseas sales weakness, rising domestic labor costs and a lack of pricing power.
“We’re in the earnings confessional season now and there is this impeachment overhang,” warned Greg Nie, technical analyst at Everen Securities.
In the bond market, Treasury yields continued to seesaw, rising modestly as some money flowed back to stocks. The 30-year Treasury bond yield edged up to 5.03% from 4.99% on Monday.
The dollar was a winner, rising 0.86 yen to 116.35 yen in New York, after Taichi Sakaiya, chief of Japan’s Economic Planning Agency, warned that an “unexpectedly strong” yen will hurt Japan’s recovery.
The yen has strengthened sharply in recent weeks. Still there is no sign that the Japanese or U.S. governments are about to intervene in currency markets.
In overseas markets, Japan’s main share index fell 0.7%, but Brazilian shares rebounded, gaining 5.3%.
Among Tuesday’s highlights:
* Big-name stocks rising sharply included Hewlett-Packard, up $2.38 to $65.88; American Express, up $3.25 to $94.75; and Intel, up $4.38 to $115.94.
Also, Citigroup soared $2.69 to $48.75 after announcing major layoffs to cut costs.
* Multinational consumer products stocks rebounded from their recent drubbing on earnings concerns. Procter & Gamble gained $2.88 to $89.50, Avon rose $1.81 to $39.19 and Gillette surged $1.88 to $43.31.
* Reflecting holiday optimism, the retailing sector was led higher by Wal-Mart, up $2 to $76.81, and Circuit City, up $3.19 to $43.50.
* The Internet sector came alive once again, with Amazon.com soaring $20.50 to a record $242.75, Yahoo up $6.75 to $198, Infoseek up $6.31 to $47.50 and Go2Net up $3.19 to $33.
In commodity trading, coffee prices hit a six-month high in New York trading as worldwide weather problems cut U.S. supplies and raised concerns that future supplies also may be tight.
December coffee futures rose 1.9 cents to $1.1975 a pound.
Oil prices also continued to edge higher.
Market Roundup, C11
