Dow slips 2.02, regaining early losses

January 24, 1995|By Bloomberg Business News

NEW YORK -- U.S. stocks closed mixed yesterday as brighter prospects for congressional passage of a Mexican aid package offset a plunge in Japanese shares and pessimism about a likely rise in U.S. interest rates next week.

Strength in oil shares, fueled by better-than-expected earnings from Exxon Corp., Texaco Inc. and Atlantic Richfield Co., also helped the market to pare early losses.

The Dow Jones industrial average recovered from a drop of 30.95 points to close down 2.02, at 3,867.41. Broader indexes also advanced from their lows, although almost twice as many stocks declined as gained on the New York Stock Exchange.

"The market had a better close than an opening, but it was a fairly narrow rally," said Jim Benning, head trader at BT Brokerage Inc. "The Mexican situation definitely helped."

Optimism about the proposed $40 billion U.S. loan-guarantee package for Mexico grew after House Speaker Newt Gingrich vowed the plan would receive House approval. many analysts now expect it to pass because of Mexico's importance as the third-largest trading partner of the United States.

Passage could help U.S. companies doing business in Mexico, traders said. "At the least, it's going to put out the fires in the short run," Mr. Benning said.

Telefonos de Mexico's class L American depositary receipts rallied to close up 87.5 cents, at $35.75, after falling as much as $1.50 earlier yesterday.

Bank shares, which had tumbled in recent weeks amid concern about their Latin American exposure, also rebounded. Citicorp rose $1.125, to $40, after falling as low as $38.50.

The Standard & Poor's 500 index recovered from a loss of 3.64 points to close up 1.04, at 465.82. The Nasdaq composite index closed down 2.54, at 759.51, after falling as much as 8.24. Trading was active, with about 326 million shares changing hands on the Big Board.

Wellcome PLC, the most actively traded stock, soared $4.375, to $15.125, after Glaxo Holdings PLC agreed to buy its competitor for 8.9 billion pounds ($14 billion), a move that would create the world's largest drug company. Glaxo ADRs, which stand for two shares each, fell $1.375, to $19.125.

Exxon climbed $1, to $63.75. The company's fourth-quarter earnings rose 27 percent, reflecting asset sales, tax credits and higher profit in its chemical division.

Japan's Nikkei 225 average plunged 1,054.7, to 17,785.49, amid concern that the cost of rebuilding after the earthquake could drive Japanese interest rates higher and hurt the economy of the second-largest trading partner of the United States.

The Nikkei rebounded this morning in Japan after the Finance Minister, Masayoshi Takemura, said that the ministry is planning a tax cut and supplementary budget to help in the reconstruction of the areas affected by the quake. By midday, the index was up 1.35 percent.

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