Strong retail sales help lift Dow by 38 MARKETS

WALL STREET

July 09, 1993|By Bloomberg Business News

NEW YORK -- U.S. stocks rallied yesterday as strong sales reports from retail chains such as Sears, Roebuck & Co. combined with fading inflation concern to push the market higher.

"The inflation scare that hit the market earlier this week is disappearing, and some top retail chains, like Sears and Wal-Mart Stores, posted robust sales last month," said Mark Donahoe, managing director in equity trading at Piper Jaffray Inc.

The Dow Jones industrial average rose 38.75, to 3,514.42. The advance was led by shares of J. P. Morgan & Co., General Electric Corp., General Motors Corp. and Sears.

The broader market averages also soared. Standard & Poor's 500 Index increased 5.80, to 448.63, and the Nasdaq Combined Composite Index gained 3.92, to 702.71.

Advancing common stocks led declining issues by about 5-to-3 on the New York Stock Exchange. The American Stock Exchange's Market Value Index rose 0.76, to 432.55.

Trading was active, with more than 284 million shares changing hands on the NYSE.

Retail stocks led the advance, even though Woolworth Corp. said second-quarter earnings will fall "well below" the prior year's level of 25 cents a share. Woolworth's stock fell 87.5 cents, to $27.

Other retail stocks rallied on reports that department stores generated sales growth of 5.3 percent in stores open at least one year. Sears rose $1.875, to $58; Wal-Mart gained $1, to $26.50; Kmart Corp. advanced 62.5 cents, to $20.625; and Dayton-Hudson Corp. increased 87.5 cents, to $66.

Meantime, concern about inflation subsided as oil prices fell to their lowest level in three years, declining 23 cents a barrel, to $17.79. Gold, a second indicator of inflation, fell $2.20 an ounce, to $395.60.

The Commodity Research Bureau's index of 21 commodities declined 1.25, to 215.98. The CRB index hit a 21-month high earlier this week as flooding along the Mississippi River damaged crops, causing soybean and grain prices to soar.

Yesterday's decline in commodity prices helped buoy a rise in government bonds, as the benchmark 30-year bond recovered all of a 3/8 -point loss. The 30-year bond rose 7/32, to 105 31/32, to yield 6.66 percent.

The rebound in Treasury bonds helped trigger computer-guided buy orders for stocks, according to Birinyi Associates Inc. Computer-driven buy orders added almost 20 points to the Dow industrials, said Philip Smyth, analyst at Birinyi Associates.

General Electric gained $2.375, to $97. The stock was recommended by David Morse, a San Diego money manager and winner of the Wall Street Journal's stock-picking contest in the first half of 1993, based on steady earnings growth.

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