Dow Carves Out 4th Straight Gain
Stocks gained Wednesday, giving Wall Street its first four-session winning streak since before the market began its steep summer slide.
The Dow Jones industrial average rose 65.39 points to 8,089.78, overcoming a late 62-point deficit despite disappointment that Federal Reserve Board Chairman Alan Greenspan gave no signal of an interest rate cut during an appearance on Capitol Hill.
The broader Standard & Poor’s 500-stock index rallied 7.80 points to 1,045.48, led by General Electric. The technology-oriented Nasdaq composite index rose 11.80 points to 1,689.91.
Investors were optimistic about a cut in interest rates even though Greenspan dashed speculation that there would be a coordinated round of rate cuts by the Group of 7 industrialized nations.
“Even though Greenspan didn’t hint about an easing, people expect lower rates--and that certainly would be a positive for equities,” said Joseph DeMarco, head U.S. trader at HSBC Asset Management in New York, which oversees $4.5 billion in U.S. investments.
Bond prices rose for the first time in four days amid expectations that slowing growth and low inflation will lead the Fed to lower interest rates. Yields on 30-year Treasuries fell to 5.22% from 5.26% on Tuesday.
Investors may have been reassured about the future of the Clinton administration and its economic policies after President Clinton declined to answer a news conference question about whether he might consider resigning as a result of the Monica Lewinsky affair.
Stocks had fallen earlier in the day after Greenspan’s comments to Congress, even though he did not rule out a U.S. rate cut.
Dow component Eastman Kodak jumped $3.19 to $84.88 after Prudential Securities analysts said a weaker dollar will help multinationals’ earnings in the fourth quarter. A strong dollar makes U.S. goods more expensive overseas.
GE rose $1.81 to $79.88, leading the S&P; 500’s gain, after Merrill Lynch & Co. analyst Jeanne G. Terrile predicted the stock could rise to $100 a share a year from now. The company may not be severely affected by Asia’s economic problems, and its finance unit will benefit as its cost of money declines, she said.
In late trading, the dollar rose against the Japanese yen for a third day after comments by Greenspan and European finance officials reduced expectations for coordinated interest rate cuts.
The dollar rose to 134.90 yen from 133.90 on Tuesday. It’s now up 5% versus the yen from a five-month low set Friday and up 3.6% this year.
Among Wednesday’s U.S. stock market highlights:
* Charles Schwab gained $3.38 to $40.56 after the San Francisco-based brokerage issued a third-quarter profit projection that exceeds most analyst forecasts.
* Reader’s Digest rose $1.81 to $19.94 after the publisher said it will cut $300 million to $350 million in costs over the next three years in an attempt to boost sagging profit. Reader’s Digest also plans to gain $200 million by selling parts of its valuable art collection and some real estate.
* Motorola climbed $3.31 to $47.13 after a news report that the company is halting construction of a $3-billion computer chip plant in the Richmond, Va., area.
* Aeroquip-Vickers fell $7.50 to $33.25 as the maker of engineered components and systems issued a third-quarter profit projection that fell shy of most analyst estimates.
Overseas, London’s FTSE-100 gained 0.2%, Tokyo’s Nikkei 225-stock average lost 0.2% and Frankfurt’s DAX-30 index rose 0.6%.
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Market Roundup, D7
