Black Monday fails to materialize as Dow rises Blue chips popular after Friday's plunge

November 19, 1991|By Thomas Easton | Thomas Easton,New York Bureau of The Sun

NEW YORK -- Stock prices closed sharply higher yesterday, easing fears prompted by Friday's disastrous session.

The Dow Jones industrial average closed up 29.52 points at 2,972.72, partially recouping the 120-point decline registered Friday.

At the close, Fidelity Investments, a Boston-based mutual fund company, said that it received an unusually strong surge of cash from investors eager to buy into large companies, which seemed to benefit from a resumption in investor confidence.

Because of the effect these companies have on the 30-stock Dow industrial average and such other major barometers as the Standard & Poor's 500 and the Wilshire 5000, the numerical benchmarks tended to overemphasize yesterday's advance. Trading rocked back and forth through much of the day, and, despite the strong close, shares of many smaller companies languished. Declining issues exceeded advancing ones by a 4-3 ratio on strong volume of 238.17 million shares.

"It was a mixed market, but not bad, considering the damage done Friday," said Albert Harmon, an independent trader on the floor of the New York Stock Exchange. Many people "expected the market to get slammed and it didn't," he said.

With interest rates at low levels and other investments, such as real estate and precious metals, either distressed or languishing, market analysts at several firms said there was little enticement for investors to dump shares despite Friday's rout.

"I think that was a one-day event," said Michael Sherman, market strategist with Shearson Lehman Brothers.

Mr. Sherman said investors were heartened by the apparent abandonment of legislation to cap interest rates on credit cards, a move that would hurt bank profitability and stifle consumer spending just before Christmas, but was nonetheless "just stupid enough to go through."

The sanguine mood that swept Wall Street by the close was in sharp contrast to the morning, when many financial firms prepared for a potentially tumultuous session. T. Rowe Price, the large Baltimore-based mutual fund, had additional people ready to receive calls from shareholders, but the effort proved unnecessary.

At the New York Stock Exchange, traders got to work early and a large crowd gathered outside the entrance on Broad Street.

"I try to put the market in perspective for my customers, and the drop Friday was significant. People are worried," Carlos Ramirez, a financial planner for American Express, said shortly after the opening. "Going in to the exchange told me things were more optimistic than I had thought."

Several visitors said they had come expecting to see panic. "When people are scared there could be a stampede," said Charles Oldsen of San Diego, "but it looked pretty normal." Cees Boot of the Netherlands agreed: "I expected to see worried people, but I did not."

Others arrived with more confidence. Diana Greenbaum of Seattle came to the exchange with her cousin, Lucie Korninkova of Prague, Czechoslovakia. "I wanted to show her we will survive," Ms. Greenbaum said.

And still others felt that no matter how crazy the market, the tumult paled compared to events elsewhere. "It looks calm to us," said Sara Townsend of New Orleans. "Of course, I don't know much about the stock exchange, but I do know about Louisiana politics. That's really scary."

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