Stocks recoup some of losses Dow climbs 33

February 25, 1993|By Bloomberg Business News

NEW YORK -- Rallies in beaten-down drug and tobacco shares yesterday enabled U.S. stocks to recoup Tuesday's losses and then some.

Optimism about low interest rates also fueled the advance in stock prices, traders said. Investors sought the returns offered by equities as the yield on the 30-year Treasury bond hovered near the record low set earlier this week.

The Dow Jones industrial average closed 33.23 points higher, at 3356.50, after falling 19.72 Tuesday. Philip Morris Cos., American Telephone & Telegraph Co. and Walt Disney Co. led yesterday's advance. Stocks fell Tuesday after the Conference Board said its consumer confidence index dropped to 68.5 in February from 76.7 in January, dimming optimism about the economic recovery.

"I think you're going to see swings like this pretty much every day until you see just what gets passed in [Congress] in terms of taxes and spending," said Jim Benning, a trader at BT Brokerage.

Broader market averages rose more sharply than the Dow. Standard & Poor's 500 Index soared 6.06, to 440.86, led by health-care, retail stores, tobacco, and drug shares. The NASDAQ Combined Composite Index vaulted 11.06, to 662.46.

Stocks across the health-care industry, from drugs and biotechnology companies to medical supply providers and health maintenance organizations, continued to rebound from its recent plunge. The Standard & Poor's 500 group of six leading drug stocks had slumped 25 percent in the past three months.

The drop was triggered by concern about President Clinton's proposals to curb drug prices and limit tax breaks for companies like drug makers that manufacture in Puerto Rico. Health care stocks were dealt another blow this week by disappointing results from human tests of Synergen Inc.'s sepsis drug, Antril.

Among drug and biotech stocks, Merck & Co. rose 87.5 cents to $38.50, Pfizer Inc. gained 62.5 cents to $57.75, and Amgen Inc. advanced $2.75 to $46.25. U.S. Healthcare Inc., an HMO company, rose $4.375 to $44.50.

Treasury bonds fell for the first time in six sessions amid slack demand for new five-year notes. The yield on the 30-year bond rose seven basis points to 6.89 percent.

Even so, investors have few alternatives but stocks since yields were still near record lows, traders said. "With Treasury bond yields at the lowest level in 16 years, it's no wonder the stock market is higher," said Edward Collins, head trader at Daiwa Securities America.

Philip Morris rose $2.75 at $66.375, rebounding from a recent slump caused by concern the Clinton administration might propose higher excise taxes on cigarettes and beer to help finance health-care reform.

Advancing common stocks topped decliners by about 2-to-1 on the New York Stock Exchange. Trading was brisk, with more than 315 million shares changing hands on the Big Board.

Investors largely shrugged off news of a 1.7 percent decline in durable goods in January.

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