U.S. markets close higher on falling interest rates in Europe

WALL STREET

December 03, 1993|By Bloomberg Business News

NEW YORK -- U.S. stocks closed mostly higher yesterday on optimism that falling interest rates in Europe would buoy economic growth.

The Dow Jones industrial average advanced 5.03, to 3,702.11, led by gains in General Electric Co. and International Business Machines Corp. The average closed just below the record 3,710.77 of Nov. 16.

The Standard & Poor's 500 Index climbed 1.22, to 463.11, and the Nasdaq Combined Composite Index rose 2.93, to 766.73. Nine common stocks gained for every seven that fell on the New York Stock Exchange. The Dow Jones transportation average advanced 7.06, to a record 1,770.67.

The rise in U.S. stocks followed the Bundesbank's decision to trim its money market rate to 6 percent from 6.25 percent. The German central bank left its discount and Lombard rates unchanged.

Lower rates tend to stimulate economic growth, and the prospect of a strengthening European economy is good news for U.S. companies, said Bill Beise, a partner at Wessels, Arnold & Henderson.

"Over time, I think our economy will definitely get a lift from what's happening in Europe on the interest rate front," he said.

"In Europe, we're seeing the right kind of progress," said Richard Bartels, director of global marketing at Batterymarch Financial Management, which oversees about $6 billion. "Rates are coming down."

The rise in stocks was constrained by concern about lower-than-expected retail sales and Friday's release of the November employment report, analysts said.

The employment survey is considered to be among the most important economic reports released each month by the government. Economists estimate the economy added 174,000 nonfarm jobs last month, according to a survey by Bloomberg Business News.

"We had a mildly positive day, despite investor apprehension about [the] employment report," said William Raftery, market analyst at Smith Barney Shearson Inc.

Meantime, "retail stocks were battered, and that weighed on the market," said John Keating, head trader at Robertson Stephens & Co. The S&P Retail Stores Index slumped 1.35 points, or 2.4 percent, to 54.08, led by slumps in Sears, Roebuck and Co. and Dayton-Hudson Corp.

Limited Inc. fell $3.50, to $18, after four Wall Street analysts lowered their investment ratings on the Columbus, Ohio, retail chain. Limited, which is struggling to revive some women's clothing chains, said Wednesday that sales at units open a year were down 7 percent last month.

Trading was active on the New York Stock Exchange, with about 253 million shares changing hands. The Limited, National Semiconductor Corp., Hanson Plc, MedImmune Inc. and Cisco Systems Inc. were the five most actively traded issues on the U.S. Composite.

National Semiconductor fell $1.25, to $15.375. Kidder, Peabody & Co. analyst Jonathan Joseph lowered his fiscal 1994 and 1995 earnings estimates because of concern about lower-than-expected orders in the second quarter.

MedImmune slumped $7, or 30 percent, to $16, as a Food and Drug Administration advisory panel voted not to recommend approval of the company's drug, Respivir, to prevent or ease lower respiratory infections in infants,

Genzyme Corp. slumped $2, to $29. The biotechnology company's 1994 earnings might fall below analysts' estimates because of a rise in costs to produce its main drug, Ceredase.

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