Dow rises 13 on good inflation report

WALL STREET

June 12, 1993|By Bloomberg Business News

NEW YORK -- Stocks gained yesterday after the Labor Department reported that producer prices were unchanged last month, a sign that inflation was under control.

The Dow Jones industrial average rose 13.29 points, to 3,505.01. The Dow's rise was restrained by declines in Texaco Inc., Exxon Corp. and Chevron Corp. For the week, the Dow was down 40.13.

Oil stocks slumped as crude prices fell below $19 a barrel for the first time since early January. The decline in oil prices was prompted by Kuwait's rejection of an OPEC agreement to maintain a current ceiling on oil production. Kuwait said it would increase output.

"If you take away the drop in oil stocks, the market had a really ZTC good day," said Edward Laux, head trader at Kidder, Peabody & Co.

The Standard & Poor's 500 Stock Index rose 1.88, to 447.26, and the Nasdaq Combined Composite Index gained 5.14, to 693.19. The American Stock Exchange's Market Value Index fell 1.48, to 434.32.

Advancing common stocks on the New York Stock Exchange exceeded declining issues by about 4-to-3. Trading was active, with about 257 million shares changing hands.

Stocks surged immediately after the government said producer prices were unchanged in May. Long-term interest rates fell sharply, helping fuel the rise in the stock market.

"The producer price report helps people realize the inflationary scare was probably only temporary," said Ronald Doran, director of institutional trading at C.L. King & Associates.

The yield on the 30-year Treasury bond fell 7 basis points, to 6.8 percent, the lowest level in more than a month. Low interest rates make stocks more attractive relative to low-yielding fixed-income securities.

On Tuesday, the Labor Department will release its report on May consumer prices. Economists estimate that consumer prices rose 0.2 percent last month. During the first four months of this year, consumer prices rose by a 4.3 percent annual rate, compared with 2.9 percent for last year.

Gerant Industries Inc., LTV Corp., Galen Health Care Inc., Chase Manhattan Corp. and Topps Co. were the five most actively traded stocks. Galen Health gained $3.875, to $18.875, after the hospital operator agreed to merge with Columbia Hospital Corp. The merger would create one of the nation's largest health-care providers. Columbia's stock rose $1.25, to $26.75.

Oil stocks fell on concern about a decline in crude prices. Oryx Energy Co. fell 62.5 cents, to $21.25; Texaco lost $1.375, to $63.125; Chevron declined $2.625, to $87.625; and Exxon slumped $1.75, to $65.25.

Showbiz Pizza Time Inc. slumped $10.125, to $18.75, after the restaurant company reduced its expectations of second-quarter earnings to a range of 18 cents to 20 cents a share because of declines in sales from its Chuck E. Cheese's restaurants.

Chase Manhattan gained 12.5 cents, to $29.625, after the money center bank sold $650 million of common stock in an equity offering. Chase Manhattan raised $100 million less than it had expected, the Wall Street Journal reported.

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.