Dow manages to rise 1.89 after sell orders trim rally


September 04, 1992|By Bloomberg Business News

NEW YORK -- Stocks rallied yesterday after Britain unveiled a borrowing program to support the pound, then faded amid a heavy dose of computer-guided sell orders.

The Dow Jones industrial average finished up 1.89, to 3,292.20, after having rallied almost 23 points, to 3,313.27, by noon.

Computer-guided sell orders clipped about 14 points from the Dow. Trading was active, with more than 212 million shares changing hands on the Big Board.

"There was a great deal of volume for what's supposed to be a semi-holiday," said Robert Stovall, president of Stovall/Twenty-First Advisers.

Early in the session, traders scrambled to buy back borrowed dollars and stocks after Britain announced a huge borrowing program to support the pound.

The pound jumped more than a pfennig on the news, while the bruised dollar staged a comeback from historic lows against the German mark. In late New York trading, the dollar was up more than 2 pfennigs, to 1.4122 marks.

Investors were also quick to seize profits in their recent winners, including airlines and retailers.

"The rest of the world was up, but some people thought 3,300 [on the Dow] was a stopping point," said Richard Meyer, head of institutional trading at Ladenburg Thalmann. "People left early for the Labor Day weekend, closed out positions and the market faded."

Stocks retreated despite the dollar's revival, gains in Treasury bonds and explosive rallies in overseas stock markets.

Britain's FT-SE 100 index rose 68.90 points, to 2381.90, and France's CAC 40 soared 69.05, to 1780.46. The gains in Europe followed a surge of 798.77 points, or 4.54 percent, to 18,386.49, in Japan's Nikkei 225 index.

On Wall Street, declines in airline and retail issues, two recent market leaders, dragged down the broader market.

Also, "The Citicorp news kind of tempered things," said Richard Ciardullo, director of institutional trading at Eagle Asset Management.

Citicorp fell 5/8 , to 16 1/2 , after the New York Times reported that a regulatory review by the Comptroller of the Currency had uncovered serious management and credit-quality problems at the bank's mortgage business. Citicorp said it expected to make no further disclosures on losses at its mortgage unit.

Moreover, "the jobless claims were a little disappointing," Mr. Ciardullo said. The Labor Department said the number of Americans who filed for jobless benefits rose 3,000, to a seasonally adjusted 386,000, in the week that ended Aug. 22.

Standard & Poor's 500 index was unchanged, at 417.98, and the NASDAQ Composite index gained 3.62, to 574.87, amid rallies in software and semiconductor issues.

Advancers outnumbered decliners by a margin of 8 to 6 on the New York Stock Exchange.

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