Rise in bond yields shrinks stock gains Dow up 6.75

WALL STREET

January 27, 1993|By Bloomberg Business News

NEW YORK -- A rise in Treasury bond yields triggered a late burst of computer-driven sell orders yesterday that wiped out most of the gains in the stock market.

The Dow Jones industrial average rose 6.75 points, to 3,298.95, nearly 22 points below the day's high of 3,320.02. The Standard & Poor's 500 index fell 0.06, to 439.95. The NASDAQ index of smaller stocks advanced 0.21, to a record high of 707.16. The American Stock Exchange Market Value index rose 2.07, to 411.59.

Advancing stocks outnumbered declining issues by a margin of 9-to-7 on the New York Stock Exchange. Trading was extremely heavy, with 315 million shares changing hands. It was the most active day of trading since Dec. 18.

"The sudden rise in Treasury yields hit the stock market with a fury," said Abbe Cocuzza of Lehman Brothers. The yield on the 30-year Treasury bond rose to 7.25 percent, after having fallen to a six-year low of 7.18 percent earlier in the session.

The gain in Treasury yields was related to a rush of corporate debt issues and comments by a spokesman for President Clinton suggesting that the administration may do more than expected to stimulate the economy.

Stocks had rallied early yesterday on optimism fed by a sharp cut in British interest rates and positive earnings reports from leading companies, such as Walt Disney.

The Bank of England lowered its key lending rate from 7 percent to 6 percent, the lowest level since 1977. The cut triggered a gain of 2.3 percent in Britain's FT-SE 100 index, to 2,835.70. The decline in British rates was a blessing for U.S. stocks because lower rates should help Britain emerge from its worst slump since the Great Depression.

Traders were also encouraged by a Conference Board survey showing that consumer confidence remains high. And the National Association of Realtors said Americans sold their homes in December at the fastest pace in more than 13 years.

Shares of leading oil producers continued to surge on reports that OPEC will cut production. Exxon rose 62.5 cents, to $61.25; Amoco advanced $1.75, to $53.25; Mobil gained 25 cents, to $63.125; Chevron rose 75 cents, to $70.75; and Atlantic Richfield rose $2, to $117.

IBM rose 12.5 cents, to $49, but down from a session high of $53.25. The advance followed an announcement that John Akers was stepping down as chairman and chief executive. IBM also slashed its quarterly dividend to 54 cents a share, from $1.21.

American Express fell $1.125, to $24, on disappointment related to the company's release of lower-than-expected earnings and the appointment of James Robinson III as chairman and chief executive of the company's Shearson Lehman Bros. division.

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