Stocks post first gain in four days despite 'nervous' investors

November 04, 1994|By Bloomberg Business News

NEW YORK -- U.S. stocks rose yesterday as auto and retail stocks gained, overcoming earlier losses caused by persistent concern over higher interest rates.

"We've been living with this type of market for six months," said John Brooks, director of sales and marketing at Notley Group in Atlanta. "People are a lot more nervous than they are saying they are."

The Dow Jones industrial average rose 8.75, to 3,845.88, adding most of its gain in the last 10 minutes of trading. It was the average's first gain in four days. Shares of Sears Roebuck & Co., Walt Disney Co. and General Motors Corp. led the way.

Stocks were mixed for most of the day as bond prices dropped amid reports of strong housing and auto sales. The reports prompted concern among bond investors that inflation will accelerate and erode the returns on their investments.

The yield on the benchmark 30-year government bond, which moves in the opposite direction to its price, ended at 8.10 percent, up from 8.09 percent Wednesday and the highest since April 1992. Higher rates are bad for stocks because they encourage people to put their money in safer fixed-rate investments. They also hurt corporate profits by raising borrowing costs.

Among broader stock market indexes, the Standard & Poor's 500 index rose 1.40, at 467.91, after losing 1.91, to 466.51, Wednesday. The Nasdaq combined composite index rose 0.28, to 772.10, after being up as much as 1.71, at 773.53. Declines in Intel Corp., U S Healthcare Inc. and Microsoft Corp. partially offset gains in MCI Communications Corp., Price/Costco Inc. and Tele-Communications Inc.

Shares of auto companies rebounded yesterday after being "blown apart over the last month" amid concern about profitability in General Motors Corp.'s North American operations and the carmaker's future sales, said Jay Ferguson, market analyst at Ferguson, Andrews & Associates in Charlottesville, Va.

Yesterday, concern about sales eased after GM said it sold 1.3 percent more cars last month than it did a year ago. The S&P index of three auto stocks, which has fallen 8 percent since GM said on Oct. 20 its North American operations lost money in the third quarter, gained 2.69, to 206.75. Shares of GM rose 87.5 cents, to $39.125; Chrysler Corp. edged up 50 cents, to $48; and Ford Motor Co. added 37.5 cents, to $29.50.

Advancing stocks equaled decliners on the Big Board, where about 285 million shares traded hands. The three-month average volume is 292 million shares.

Shares of some retailers gained on strong October sales reports, led by AnnTaylor Corp.'s 20 percent increase and Best Buy Co.'s percent gain.

Shares of Best Buy soared $3.375, to $42; Ann Taylor jumped $1.25, to $44.25; The Limited Inc. rose $1.75, to $20.75; Gap Inc. added $2.625, to $36.25; Sears Roebuck & Co. spurted $1, to $49.50; and Dayton Hudson Corp. skyrocketed $4.75, to

$81.875.

But shares in Wal-Mart Stores Inc. skidded 37.5 cents, to $23.50, as the nation's largest retailer reported smaller-than-usual sales growth.

Bank stocks gained as investors bet that the demand for capital would continue to grow as the economy rebounds.

"The economy has reached the point now that if it continues to expand, you're going to see companies having to borrow money," said Paul Mackey, an analyst at Dean Witter Reynolds who follows the industry.

The S&P money center bank index of seven stocks gained 1.87, to 159.15, while its regional bank index added 0.70, to 171.96, after being up as much as 1.80.

NationsBank Corp. rose 62.5 cents, to $49.50.

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