Prospect of rate cuts in Europe lifts U.S. stocks


February 02, 1993|By Bloomberg Business News

NEW YORK -- Stock prices closed higher yesterday after reports of possible interest rate cuts in Europe. Lower European interest rates would spur faster economic growth and make dollar-denominated assets more attractive, traders said.

Shares also got a boost from reports that U.S. industrial output expanded in January to its highest level since July 1988, traders said.

The Dow Jones industrial average rose 22.15, to 3332.18, led by American Express Co. The stock rose $1.50, to $24.75, after James Robinson III resigned as chairman and head of the Shearson Lehman Bros. unit under pressure from shareholders. American Express shares fell 9.3 percent last week after Mr. Robinson successfully resisted efforts by some directors to oust him. Richard Furlaud, a board member, was named to succeed Mr. Robinson.

Among broader market averages, Standard & Poor's 500 index climbed 3.74, to a record 442.52, eclipsing its previous high of 441.28 on Dec. 18. The NASDAQ Combined Composite index soared 5.48, to 701.82.

"There's a little more confidence" that European interest rates will fall soon, said Richard Ciardullo, director of trading at Eagle Asset Management.

That speculation was fanned by a report in the Sunday Times (London) that said British Prime Minister John Major wants base lending rates at 4 percent by the summer, down from the current 6 percent.

The report sent the FT-SE 100 index up 44.4 points, to 2851.60,

even though Mr. Major's office denied the report. Speculation that Germany and Japan might also lower interest rates soon also resurfaced yesterday, buoying shares in those two markets, traders said.

Advancing common stocks in the United States outnumbered decliners by a margin of 2-to-1 on the New York Stock Exchange. Trading was active, with more than 237 million shares changing hands on the Big Board.

More economic figures suggesting continued economic growth served as a catalyst for gains in the United States, traders said. The National Association of Purchasing Managers said yesterday that its index of manufacturing activity rose to 58 in January from 55.4 in December, the fourth straight monthly gain and the highest reading since July 1988.

The stock market was also helped by a rebound in cellular telephone shares, which have been battered by reports that concerns about the possible health risks of using cellular phones are starting to hurt sales.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.