Auto, technology stocks gain Dow edges up 1.69

March 10, 1994|By Bloomberg Business News

NEW YORK -- U.S. stocks posted small gains yesterday as auto and technology stocks gained and the bond market rebounded.

Stocks were lower for most of the day amid persistent concern that domestic interest rates are headed higher.

Five weeks after the Federal Reserve Board raised interest rates for the first time since 1989, "the market's in a rebound phase," said Christine Callies, market analyst at Brown Bros. Harriman.

"The interest-rate conditions that had been favorable in the fourth quarter are no longer as favorable, but the market is developing enough new leadership in technology and what are sometimes called soft consumer cyclicals, like apparel manufacturers, that the rallies really aren't flukes," Ms. Callies said.

The Dow Jones industrial average closed up 1.69, to 3,853.41, after earlier falling 21.67 points. International Paper Co., down $2.75, to $71.50, sliced more than 6 points from the average on concern that weak paper prices will lead to lower-than-expected first-quarter profits.

The Standard & Poor's 500 Index rose 1.18, to 467.06, after dropping as much as 2.48. The Nasdaq Combined Composite gained 0.93, to 793.05, after falling by 2.83.

Almost five stocks dropped for every four that rose on the New York Stock Exchange, where trading increased to 309.8 million shares from 298 million Tuesday.

Prices for U.S. Treasury bonds gained for only the eighth time in more than a month after a Federal Reserve report on the economy said economic growth was moderate in January and February as inflation remained under control.

Long-term interest rates, as reflected in the yield on the benchmark 30-year Treasury bond, fell to 6.83 percent from 6.86 percent Tuesday.

"The market is real nervous right now, because while earnings remain strong, rates have gone higher," said William Dutton, portfolio manager of Mesirow Asset Management's Skyline Special Equities in Chicago.

Long-term interest rates have risen from a record low of 5.77 percent, set Oct. 15.

Semiconductor and other technology stocks advanced after an industry group said late Tuesday that chip makers received $1.15 in new orders in February for every $1 in shipments, up from a revised $1.10 in January and forecasts of $1.08.

Auto stocks climbed after the Wall Street Journal said Japan is ready to approve more Chrysler Corp. exports of Jeep Cherokees. Ford Motor Co. also said it will aggressively promote its new Windstar minivan and raise North American production capacity by 300,000 cars and trucks this year.

Chrysler rose 75 cents, to $60.625; Ford climbed $1.625, to $65.375; and General Motors Corp. gained 62.5 cents, to $62.625.

Until the final hour of trading, stocks had declined amid persistent concern domestic interest rates are headed higher.

Analysts expect higher bond yields will translate into rising deposit rates for certificates of deposit and savings accounts, siphoning money away from the stock market.

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