Dow gains 23.89 in holiday trading

October 11, 1994|By Bloomberg Business News

NEW YORK -- U.S. stocks rose yesterday for a second day amid rebounds in some of last week's biggest laggards, automakers and semiconductors.

Trading was the slowest in five weeks because of the Columbus Day holiday. About 215 million shares changed hands on the New York Stock Exchange, down from 284 million on Friday and the fewest since 200 million traded on Sept. 6, the day after Labor Day.

The market's advance came amid expectations that the next few weeks will bring reports of vigorous third-quarter profit growth. It also reflects confidence, underscored by Friday's employment report, that the Federal Reserve won't move to raise interest rates until the Nov. 15 meeting of its policy-making arm, traders said.

"There's a feeling that most of the predicted October disaster is behind us," said Thomas Gallagher, head trader at Oppenheimer & Co. Stocks are recovering from three weeks of losses caused by concern the Fed would boost rates to subdue inflation -- and hinder earnings growth in the process.

The Dow Jones industrial average gained 23.89, to 3,821.32. Including Friday's 21.87-point gain, the average has recouped much of the 67.63 points it had shed so far this month. International Paper Co. and General Motors Corp. led yesterday's advance.

GM climbed $1.625, to $45.50; Ford Motor Co. closed up $1, at $28.25; and Chrysler Corp. added $1.25, to $45.875. The auto group rebounded 7.15, to 214.42, yesterday, recouping most of the 4 percent drop of the four previous sessions. Analysts expect the three automakers to post third-quarter earnings of more than $2 billion.

Two stocks rose for every one that fell on the New York Stock Exchange.

Among broader market measures, the Standard & Poor's 500 Index went up 3.94, to 459.04, extending Friday's 2.74-point gain. Autos and semiconductors were the biggest gainers.

The Nasdaq combined composite index rallied 6.85, to 756.81, after climbing 5.77 on Friday. Intel Corp., Tele-Communications Inc. and Apple Computer Inc. paced the rise.

Semiconductor shares recovered amid perceptions that recent worries of price cuts crimping the industry's earnings growth may be overblown, traders said. Micron Technology Inc. was upgraded yesterday by analysts at SoundView Financial Group and Goldman, Sachs & Co. Goldman also raised its rating of Texas Instruments Inc.

Intel rose $1, to $60.4375, and Micron added $1.75, to $35. The S&P semiconductor group rose 0.62, to 64.38, after falling 1.5 percent in the previous four days.

Perceptions of an imminent rate increase began to fade Friday after the government reported the economy created 239,000 nonfarm jobs in September, lagging economists' estimates of a 254,000 gain. The report allayed concern that the economy is expanding fast enough to accelerate inflation.

Concern about higher interest rates may resurface later this week, when the government releases September inflation reports. The producer price report is set for release Thursday, to be followed by the consumer price index on Friday.

"If we get decent numbers on inflation Thursday and Friday, it could lead to a year-end rally," Oppenheimer's Mr. Gallagher said.

xTC Stocks also got a boost early yesterday from a two-day rise in oil shares sparked by tensions in the Persian Gulf. The oil rally sputtered after Iraq's ambassador to the United Nations said Baghdad had ordered the withdrawal of its troops from the area north of Kuwait. The S&P international oil group, which rose as much as 0.66 percent, to 402.09 yesterday, closed up 1.30, at 400.76.

Apple Computer, the subject of takeover speculation in recent days, vaulted $1.875, to $38.875. The latest speculation is that the maker of Macintosh computers may sell a minority stake to International Business Machines Corp., Motorola Inc. or AT&T Corp.

Scott Paper Co. soared $3.25, to $64.75. The Philadelphia paper maker sold its S. D. Warren printing and publishing unit for $1.5 billion.

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