Pickup in economy sends Dow to 3rd straight record

WALL STREET

December 30, 1993|By Bloomberg Business News

NEW YORK -- U.S. stocks closed at record highs for a third straight session amid more signs the economy is gaining momentum.

The Dow Jones industrial average rose 0.56, to an all-time high of 3,794.33, led by a gain in Sears, Roebuck & Co., which added $1.875, to $53.625.

Shares of smaller stocks rallied for a fifth session, as the Nasdaq Composite Index gained 3.91, to 768.48, closing at its highest level since mid-November.

Stocks received a boost from the Commerce Department's report that its index of leading economic indicators, a key gauge of future economic growth, was up 0.5 percent in November. Economists were forecasting an increase of 0.4 percent, according to a survey by Bloomberg Business News.

Separately, the National Association of Realtors said sales of previously owned homes rose a stronger-than-expected 2.9 percent in November, to a record 4.21 million annual rate.

"The economy has picked up in the second half of 1993, and there's every reason to think it will continue into 1994," said Neal Soss, chief economist at CS First Boston Corp.

"Clearly, Nasdaq stocks are getting a boost from a stream of reports that show the economy is gaining momentum," said Barbara Friedman, who co-manages about $60 million for Loomis Sayles & Co. in Boston.

A rally in software stocks buoyed the Nasdaq's gain. Oracle Systems Corp. rebounded 50 cents, to $29.50, after losing 19 percent of its market value in the prior four sessions amid concern about slowing earnings growth. Novell Inc. climbed 50 cents, to $20.50.

The Standard & Poor's 500 Index fell 0.36, to 470.58. It was the first time the S&P 500 declined in five sessions. The S&P 500 closed Tuesday at a record 470.94.

"Despite the S&P 500's decline, the market rally is broadening," said Christine Callies, market analyst at Brown Brothers Harriman & Co. "It's a bullish sign because some lagging indexes are starting to catch up."

Besides the economic optimism, stocks are getting a lift from seasonal patterns. Stocks typically rise between Christmas and the New Year's holiday. In the past 41 years, stocks rose 32 times in the final week of the year.

"At the end of the year, stocks rally, and that's what we've seen so far this week, as both the Dow industrials and S&P 500 have set records," said Bill Beise, a partner at Wessels, Arnold & Henderson in Minneapolis.

Trading was active yesterday. About 269 million shares changed hands on the Big Board, above the daily average of 176.8 million shares during the last week of 1992.

Ten common stocks advanced for every seven that fell on the New York Stock Exchange, as retail and software stocks gained while airline shares declined.

The Dow Jones transportation average fell 4.29, to 1,771.32, after closing at a record 1,775.61 Tuesday. The decline was led by UAL Corp. and Delta Airlines Inc.

UAL slumped $2.125, to $146, after Merrill Lynch & Co. cut its investment rating on the stock to intermediate-term "neutral" from "buy." Delta slid $1, to $54.625, after Prudential Securities Inc. cut its rating to "hold" from "buy."

Ameritech Corp., SCEcorp, Repsol SA, Novell Inc. and Gerant Cos. were the five most actively traded issues on the U.S. Composite.

Among individual issues, Kmart Corp. declined 37.5 cents, to $21.375. Shares of the retail chain were downgraded to "hold" from "buy" at Prudential.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.