NEW YORK -- U.S. markets remained quiet yesterday in the wake of Japan's announcement of a huge economic revitalization program. Analysts said the slight reaction reflected widespread skepticism that the island nation could spark a global economic turnaround.
"The U.S. is the world's largest open economy. . . . The splashing of the minnow doesn't affect the whale," said economist Robert Brusca of Nikko Securities in New York.
While the Japanese stock market rose more than 2 percent on news of a planned $86.6 billion economic reform and investment program, trading in U.S. stocks and bonds was quiet and stable -- typical for a muggy Friday in August.
The dollar slipped against the yen, falling to 123.35 yen per dollar, nearly reaching its 1992 low of 122.7.
But the Dow Jones industrial average, which opened to a five-point gain, steadily rose from midmorning to early afternoon despite more discouraging statistics on the economy. The Dow finished up 12.97 points to close at 3,267.61, while advances outpaced declines on the New York Stock Exchange by a modest margin of 931-to-751 on light volume of 153 million shares, down from 178 million Thursday.
Over-the-counter stocks were up slightly in slow trading. And U.S. government securities fell slightly.
Some stocks, such as construction-related companies that could possibly benefit from the proposed spending on Japanese infrastructure, did well yesterday.
But William LeFevre, senior vice president of Tucker Anthony Inc. in New York, said those stocks were benefiting mostly from expectations of a push in construction spending in Florida and Louisiana.
While the attempt to prime the Japanese economic pump won't have an immediate impact on the U.S. economy, Mr. Brusca and others said it would likely help the United States over the long term.
The stability of the U.S. markets were read by some as an endorsement of the move in Tokyo.
Kathleen Stephansen, an economist at Donaldson, Lufkin & Jenrette, was impressed by the commitment of 2 percent of Japan's gross national product to the program.
Although she doubted it would accomplish the promised growth, she praised the move for "calming" fears of a global economic downturn.
Professor Robert Uriu at Columbia University's Institute of EastAsian Studies said many fear that some of the reforms may only delay, instead of cure, economic pains.
The Japanese economy, like all others, "runs on faith," he said. Covering up bad news may set the Japanese up "for a fall six months or a year from now," he warned.
Among Dow components, Alcoa rose 1 3/4 to 66 1/4 , Chevron gained 1 to 72 3/4 , and Texaco added 1 1/8 to 65 3/8 . But IBM languished as on Wednesday, posting a 1/8 loss at 87 1/4 .
Merck topped the most-actives list, down 1/2 at 49 3/8 on 2.6 million shares. And General Motors eased 1/4 to 33 1/2 on active volume of 2.4 million shares as traders continued to react to possible plant closings tied to a strike at an Ohio fabricating plant.
The Dow transports rose 4.78 to 1216.27 with help from Roadway Services, up 2 at 60 1/2 .