Dow up 42 as market rebounds

May 02, 1991|By Robert J. Cole | Robert J. Cole,New York Times News Service

NEW YORK -- Wall Street got back on track yesterday, lifting stocks sharply in heavy trading. Most of the buying, though, came from small investors, not big institutions, which were selling while the others were buying.

The Dow Jones industrial average, which edged up 10.89 points on Tuesday, barreled ahead a solid 42.33 yesterday, to 2,930.20 -- practically erasing last week's 53.21-point loss.

"There was lots and lots of good news," said Hugh Johnson, chief economist at First Albany Corp.

But Laszlo Birinyi, head of the research firm bearing his name, said, "The big buyers are not getting in, but if the market holds, they will be forced to."

While the "smart money" supposedly feels the blue chips are in for a tumble, the Dow now stands a little less than 75 points from its record high of 3,004.46, established in mid-April.

The Standard & Poor's 500 climbed almost as much as the Dow, and despite a disappointing drop in Apple Computer, the over-the-counter market, where Apple trades, still managed to show a gain.

Leading the NASDAQ active list, Apple plunged 7 3/4 , to 47 1/4 , with 16.7 million shares -- or 14 percent of the stock -- changing hands.

In a surprise forecast, Apple said that profits in the current quarter might not come up to those of a year earlier.

Mr. Birinyi called the decline in Apple "the continuation of yet another technology stock that has fallen out of favor." He described the selling as "more exaggerated than it should have been."

"The real stars today," Mr. Birinyi said, "were the drug stocks, like Merck, Bristol-Myers, Pfizer, Eli Lilly and Johnson & Johnson; some of the cyclicals, like Kimberly-Clark, Alcoa and Imcera; and the interest-sensitive insurers, like Travelers, Aetna and Conseco."

Ticking off the good news that drove the market yesterday, Mr. Johnson of First Albany listed these items:

* Bankers cut the prime rate from 9 percent to 8 1/2 a day after the Fed cut two key rates.

* The Commerce Department said its Index of Leading Economic Indicators had risen 0.5 percent, the second monthly gain in a row.

* The National Association of Purchasing Management said its index of how many purchasing managers expect stronger orders rose to 42.1 percent last month. It was 40 percent in March.

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