Russian revolt's failure buoys investors Nasdaq index closes at new high

WALL STREET

October 05, 1993|By Bloomberg Business News

NEW YORK -- U.S. stocks ended mostly higher yesterday, and over-the-counter issues closed at a record high, after investors saw a weekend revolt against Russian President Boris N. Yeltsin fizzle.

Investors downplayed the sluggish economy amid conflicting reports that left unclear just how strong the economic recovery might be.

The surrender of opponents of Mr. Yeltsin after a weekend revolt heartened investors and proved his ability to stay in power, said Don Hays, director of investment strategy at Wheat First Butcher & Singer in Richmond, Va.

If Mr. Yeltsin forms a parliament more receptive to modernizing the economy, "he might be able to go forward a bit," Mr. Hays said.

The Dow Jones industrial average, which gained 38 points last week, fell 3.35, to 3,577.76. Chevron Corp. led the decline, sliding $2, to $96.375, amid concern about its development plans in Kazakhstan and a refinery in El Segundo, Calif., that the Environmental Protection Agency said was being built without a permit.

Advancing common stocks outpaced declining issues by more than 9-to-8 on the New York Stock Exchange, where 229 million shares changed hands.

The Nasdaq Combined Composite Index gained 1.61, to close at a record 764.84, helped by gains in MCI Communications Corp., Microsoft Corp. and Comcast Corp.

The Standard & Poor's 500 Index gained 0.06, to 461.34, led by retail, household products and semiconductor stocks. A merger between KeyCorp of Albany, N.Y., and Society Corp. of Cleveland boosted regional bank stocks, as a merger of Columbia Healthcare Corp., and HCA-Hospital Corp. of America helped hospital management stocks.

Blue-chip stocks were hurt by concerns about the economy and third-quarter earnings, fueled in part by yesterday's government figures showing construction spending in August fell 1.1 percent, the largest decline in four months.

On Friday, the government said the index of leading economic indicators rose 1 percent in August, topping analysts' estimates of a 0.8 percent advance and the biggest one-month gain since a 1.7 percent increase last December. Other reports showed factory orders rose 0.9 percent in August and the level of manufacturing activity increasing in September.

"For a while now, we've had this ongoing problem of weak and strong, weak and strong," said Barry Berman, head trader at Robert W. Baird & Co. in Milwaukee. "We haven't had consistent indicators to tell you how things are going."

Against that background, many institutional investors were reluctant to put more cash into the market until at least Friday, when September's nonfarm payroll statistics are released, Mr. Berman said.

Some analysts think the economic picture is improving and concerns are mostly unfounded. "Leading economic indicators were up nicely last week," said Mr. Hays of Wheat First.

Lower gold and crude oil prices further eased investors' concern about rising inflation and interest rates damaging the economy and the stock market, analysts said. Gold for December delivery fell $2.30 an ounce, to $354.60, as November oil dropped 21 cents, to $18.42 a barrel.

The yield on the benchmark 30-year Treasury bond rose 1 basis point, to 6 percent from 5.99 percent.

European stock markets closed mostly higher after Mr. Yeltsin gained the upper hand against opponents. Britain's FT-SE 100 index rose 0.93 percent, Germany's DAX index closed 0.61 percent ahead, and the CAC 40 index in Paris gained 0.56 percent. In Tokyo, the Nikkei 225 index dipped 0.09 percent.

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