Blue Chips Close Higher Despite Asian Turmoil
Blue-chip stocks bounced higher Monday despite another rough day overseas, as bargain hunters took advantage of an early slide that pushed some popular averages to the lowest level since the market sell-off last fall.
The Dow Jones industrial average slid 137 points in the opening minutes, sinking below 7,500 for the first time in two months, but rose 66.76 to 7,647.18 by the closing bell after changing course three times during the session.
Analysts said the bounce in U.S. stocks was a relief rally after the Dow lost 386 points last week--its biggest weekly decline ever in point terms--as investors headed for the exit door, fearing more bad news from Asian markets over the weekend.
The latest hot spot was Hong Kong, where the Hang Seng index lost nearly 9% to close at its lowest level since March 1995, mauled by news that the once-powerful investment house Peregrine Investments Holdings, one of Asia’s largest independent investment banks, filed for liquidation.
“Maybe Peregrine is just the tip of the iceberg,” said Michael Metz, chief investment strategist at CIBC Oppenheimer & Co. in New York. “We have more of this financial unraveling to do before we get out of the woods. It’s going to put a lid on the market for quite a period.”
The development led to big losses in Singapore and Tokyo markets, which provoked slides in London, Frankfurt and Paris indexes, but all eventually rebounded.
Tokyo’s key share index ended at its lowest level in 2 1/2 years, with the benchmark Nikkei-225 average off 2.21%.
A contagious mix of fast-falling currencies and collapsing financial systems has sent Asian economies reeling over the last six months.
Wall Street analysts said the market was oversold as U.S. stocks headed into the earnings reporting season.
“The forces of light have finally returned to Wall Street,” said Joseph Battipaglia, chief investment officer at Gruntal & Co.
Cautious investors parked some of their money in bonds, lifting the key 30-year U.S. Treasury to yield 5.71% from 5.73% on Friday.
In New York, technology shares, considered especially vulnerable to the economic trouble in Asia, were instrumental in the stock market’s turnaround.
Intel, which is due to report on its latest results after today’s close, rose $3.75 to $75.63 to lead the rebound on the technology-heavy Nasdaq market, which briefly fell to its lowest level since late October’s sell-off.
The Nasdaq composite index rose 4.36 points to 1,507.58 after recovering from an early 36-point slide.
Trading volume was extremely heavy again, with 705.45 million shares traded on the New York Stock Exchange, the sixth-biggest tally in NYSE history.
Similarly, declining issues outnumbered advancers by a 9-7 margin on the NYSE and by nearly a 2-1 ratio in Nasdaq trading.
The Standard & Poor’s 500-stock index rose 11.52 points to 939.21 after wiping out an early 15-point deficit, and the NYSE composite index rose 4.14 points to 491.61. But the Russell 2,000 index of smaller companies fell 2.07 points to 410.88.
The broad market was mixed, with most indexes posting modest gains, but declining issues outnumbered advancers by a wide margin.
Among Monday’s highlights:
* Several of the Dow’s most popular components led the rebound: Merck rose $3.31 to $106.19; Procter & Gamble rose $3.44 to $82.31; and General Electric rose $2 to $74.44.
* Top technology issues, in addition to Intel, included Dell Computer, up $3.88 to $87.06; and Microsoft, up $2.50 to $129.50.
In currency trading, the dollar also gained ground, benefiting from the flight to U.S. Treasuries. In late New York trading, the U.S. currency hovered at 132.69 Japanese yen from 132.03 on Friday.
Overseas, stocks fell 14% in Moscow, but several European markets trimmed their losses as Wall Street turned around. Frankfurt’s Dax-30 index fell 3.5%, the Paris CAC-40 fell 2.0% and London’s FTSE-100 fell 1.4%.
Market Roundup, D14
