Economic news gives Dow 28-point lift

WALL STREET

October 02, 1993|By Bloomberg Business News

NEW YORK -- U.S. stocks rose yesterday for the second time this week amid optimism about the economy aroused by several favorable economic reports.

"The economic news isn't too bad, and that's encouraging for many investors," said Thom Brown, a managing director at Rutherford, Brown & Catherwood Inc.

The Dow Jones industrial average surged 25.99 points to 3,581.11. The average was up 38 for the week. The Standard & Poor's 500 Index gained 2.35 to 461.28, and the Nasdaq Combined Composite Index rose 0.45 to 763.23.

The American Stock Exchange Market Value Index rose 1.20 to 461.59. Advancing common stocks led declining issues by about 9 to 8 on the New York Stock Exchange.

Yesterday morning, the Commerce Department reported that the government's key gauge of economic forecasting advanced 1 percent in August. The rise in the index of leading economic indicators exceeded analysts' estimates of a 0.8 percent advance. It was the biggest one-month gain since a 1.7 percent increase last December.

Other reports yesterday showed that factory orders rose 0.9 percent in August, and the National Association of Purchasing Managers reported that the level of manufacturing activity increased in September.

"I think the bottom line is we're going to get decent economic growth in the second half," said Michael Strauss, chief economist at Yamaichi International (America). "There are favorable signs surfacing for the economy."

The advance in stocks was led by shares of companies that benefit most when the economy improves. Paper and auto stocks were among the best-performing groups in the market.

Weyerhaeuser Co. rose $1.75 to $42.50, Louisiana-Pacific Corp. advanced $1.25 to $34, and Georgia-Pacific Corp. gained $1.375 to $63.625. Among autos, Ford Motor Co. rose $1.25 to $56.50.

"This is a stock pickers' market if I have ever seen one," said Stan Watson, chief investment officer at Capstone Asset Management Co., which oversees $1.5 billion. "Every day it seems there is a new group of stocks that is leading the market, and every day it seems there is another group of stocks that is taking a beating. The bottom line is you have to hold the right stocks, or sooner or later you're going to get hurt in this market."

Trading was active, as about 260 million shares changed hands on the NYSE.

Sun Microsystems Inc., U.S. Healthcare Inc., Intel Corp., General Motors Corp. and Spectrum Information Technologies Inc. were the five most actively traded stocks on the U.S. Composite.

Sun Microsystems fell $1.875 to $22.125 after an analyst at Prudential Securities Inc. predicted shipments of Sun workstations would fall short of expectations in the quarter just ended. The analyst, Laura Conigliaro, cut her earnings estimates for the company.

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