Late bond-market rally helps push Dow up 11.07 nTC

Wall Street

January 22, 1993|By Bloomberg Business News

NEW YORK -- Stock prices, buoyed by an afternoon bond-market rally, closed higher on signs that interest rates might be headed lower. Over-the-counter shares again set a record.

Better-than-expected earnings from computer software and regional telephone companies, coupled with fresh reports of economic recovery, also helped stocks, traders said.

The Dow Jones industrial average closed near session highs, climbing 11.07, to 3,253.02, led by Philip Morris Cos. and General Motors Corp. Among broad market averages, Standard & Poor's 500 index rose 2.12, to 435.49, and the NASDAQ Combined Composite index surged 3.31, to an all-time high of 700.75, surpassing the old high of 698.13, set on Monday.

A jump in Treasury prices served as the catalyst for the afternoon upswing in the stock market, which had been little changed, traders said. Bonds gained after Laura Tyson, nominated to head the Council of Economic Advisers, said the Clinton administration would consider reducing the amount of long-term bonds sold by the Treasury. Less long-term debt presumably would lower long-term rates and reduce financing costs.

"That's an old piece of news, but the stock futures zoomed on that," said Thomas Gallagher, managing director in charge of capital commitment at Oppenheimer & Co. "I guess some people didn't know." Falling bond yields tend to make stocks more attractive than fixed-income securities.

Advancing stocks outpaced decliners by a margin of 8-to-6 among common stocks on the New York Stock Exchange.

Trading was active, with more than 255 million shares changing hands on the Big Board.

Talk of lower rates in the United States was reinforced by perceptions that European interest rates might be coming down, traders said. Britain's FT-SE 100 index jumped 24.60, to close at 2773.30, after reports of rising unemployment and declining retail sales rekindled hopes of an imminent cut in interest rates.

"The market envisions that interest rates are going to go easier in Europe," said Peter DaPuzzo, senior managing director at Cantor, Fitzgerald & Co. At the same time, he said, "there's no pressure on interest rates in the U.S. If rates stay low and inflation stays low, the market could go forward."

More signs of economic strength also helped stocks, traders said. The Federal Reserve's "beige book," a summary of regional economic conditions, showed the expansion is accelerating without producing inflationary pressures.

Regional Bell operating companies, bolstered by strong earnings from Bell Atlantic Corp., Nynex Corp., and US West Inc., advanced the most in the S&P 500.

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