Dow rises 13 despite Greenspan remarks

WALL STREET

October 23, 1993|By Bloomberg Business News

NEW YORK -- Stocks closed mixed yesterday after comments by Federal Reserve Chairman Alan Greenspan disrupted the market rally.

The Dow Jones industrial average rose 13.14 points, to 3,649.30, but broader market averages fell.

Stocks were higher for most of the day. Then Mr. Greenspan spoke and said economic conditions were improving. "We are clearly making headway," he said during a speech yesterday before the National Italian American Foundation.

His remarks caused Treasury bond yields to surge, triggering concern that interest rates may have bottomed. The yield on the 30-year bond rose yesterday to 5.98 percent, from 5.91 percent Thursday.

"Earnings reports and the Federal Reserve indicate things are getting better," said Thomas Gallagher, managing director in charge of capital commitment at Oppenheimer & Co. "This would seem to be good news for stocks, but then there's the concern that interest rates may not fall much more."

Low rates have been a driving force behind this year's stock market rally. If rates start to rise, funds might move out of stocks into fixed-income securities.

The Dow industrials rose to a new high of 3,676.96 yesterday, before backing off to close below the record of 3,652.09, set Aug. 25. For the week, the Dow was up 19.57 points.

The Standard & Poor's 500 Index fell for the fifth straight day, sliding 2.08, to 463.28, and the American Stock Exchange Market Value Index declined 0.27, to 477.25. The New York Stock Exchange Composite Index slumped 0.85, to 257.06.

Trading was active on the NYSE, with about 302 million shares changing hands. The number of declining common stocks exceeded the number of advancing issues by a slight margin.

The Nasdaq Combined Composite Index rose 1.40, to 772.68, led by gains in Novell Inc. and Microsoft Corp.

The rise in interest rates offset optimism about the release of higher-than-expected corporate profits from leading companies like United Technologies Corp.

"Earnings are definitely coming in at levels above analysts' expectations," said John Blair, director of trading at NatWest Securities Corp.

Institutional Brokers Estimate System Inc., a unit of Citicorp, said more than half the third-quarter corporate profit reports were above analysts' estimates. Meantime, the Federal Reserve bank Philadelphia said Thursday that its October index of manufacturing conditions rose to 15.1, from 0.7 in September.

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