Stocks continue climb on good economic news

WALL STREET

December 08, 1992|By Bloomberg Business News

NEW YORK -- Lingering optimism from the good economic news on Friday, coupled with falling bond yields, propelled U.S. stocks higher yesterday for a second consecutive session.

The Dow Jones industrial average rose 18.65, to close at 3307.33, led by a rally in American Express Co. shares and a late flurry of computer-guided buy orders.

Broader market averages again set records. The Standard & Poor's 500 climbed 3.25, to a record 435.31, surpassing the previous high set on Friday. The NASDAQ Combined Composite Index jumped 4.92, to a new high of 666.52. The New York Stock Exchange Composite Index rose 1.59, to a record closing high of 239.36.

Advancing common stocks outnumbered decliners by a margin of almost 2-to-1 on the New York Stock Exchange. Trading was active, with almost 219 million shares changing hands on the Big Board.

The combination of employment growth and declining bond yields encouraged an influx of money into stocks, traders said.

"The bulls have almost everything going for them," said Thomas Gallagher, managing director in charge of capital commitment at Oppenheimer & Co.

The Labor Department on Friday said 105,000 non-farm jobs were created in November, the largest increase since July. And the nation's unemployment rate fell to 7.2 percent last month, for the fifth straight monthly decline.

"People feel better about the jobs numbers and that's being reflected in the stock market," said Richard Meyer, head of institutional trading at Ladenburg Thalmann.

Meantime, declining Treasury yields also helped to buoy stocks, traders said. The yield on the benchmark 30-year bond dropped 4 basis points, to 7.45 percent, influenced by expectations that President-elect Bill Clinton would soon announce a conservative team of economic policymakers, led by Sen. Lloyd Bentsen, D-Texas, as Treasury secretary.

The Dow industrials outperformed the broader market, due largely to the rise in American Express, Oppenheimer's Mr. Gallagher said. "The market's due for a correction," he said.

American Express, the most actively traded stock, leapt $1.50, to $24.875, as investors reacted positively to news that Chief Executive James Robinson III plans to step down next year when a successor is found. Mr. Robinson, who has come under growing criticism in the past three years about his management style and the company's sagging profits, said the "obvious" internal candidate to succeed him is Harvey Golub, who heads the company's travel services division. During the day, American Express shares hit a new 52-week high of $25.375.

International oil, telephone, drug and health care stocks gained the most among S&P 500 industries. .

American Express Co., Home Shopping Network, Chrysler Corp., Westinghouse Electric Corp. and Eagle Hardware & Garden were the five most actively traded stocks.

Home Shopping Network shares fell 12.5 cents, to $6.125, after Liberty Media Corp. said yesterday morning it would buy 20 million Home Shopping class B common shares from RMS L.P., which is controlled by Home Shopping's chairman and chief executive, Roy M. Speer. Liberty Media plans to pay $60 million in cash and issue 4 million class A common shares.

Chrysler gained 75 cents, to $32.375.

American Dental Laser surged $4.125, to $9.75, following Food and Drug Administration approval of the company's KCP 2000 kinetic cavity preparation instrument.

Eagle Hardware & Garden plunged $6.625, to $26.75, on lower-than-expected third-quarter results.

Dolco Packaging Corp. tumbled $3.75, to $7.50, following a downward restatement of earnings.

Lifeline Systems dropped $1.50, to $4, after the company projected losses for the fourth quarter and year because of weaker-than-expected demand for its medical emergency device.

SPI Pharmaceuticals skidded $5.125, to $13, in the wake of the company's decision to slash its quarterly dividend 75 percent because United Nations sanctions against the former Yugoslavia interrupted shipments to the company's Yugoslav venture ICN Galenika.

General Motors gained 25 cents, to $34.25, after the company said it is considering curtailing its plans to produce an electric car within the next three years. In addition, the auto maker said its Oldsmobile unit will cut prices on its Cutlass Supreme and Ciera models by up to $1,400 in an effort to boost sales.

Glaxo Holdings Plc American depositary receipts, which soared on Friday, rose 62.5 cents, to $26.125. Speculation is mounting that U.S. regulators will approve Imigran, the company's drug to treat migraine headaches.

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