Stocks gain on revived optimism about rates Bank issues strong, but Dow industrials end week down 51

March 23, 1996|By BLOOMBERG BUSINESS NEWS

NEW YORK - U.S. stocks rose for the first time in four days yesterday as bank and other financial issues gained on optimism that borrowing costs won't rise further this year.

Signs that consumers are tapped out and price increases aren't sticking have led investors to conclude the economy is expanding at a moderate pace. Only two weeks ago, stocks tumbled when a report showing brisk job growth in February sparked concern that rising interest rates would quash profits.

"The economy's muddling through and there's still going to be pockets of companies whose earnings are pretty good," said John Dale, a money manager in charge of $1.2 billion Peregrine Capital Management Inc. "The big lesson of [recent] recession scares and growth scares is that if you rearranged your portfolio for either one, you made a big mistake."

The Dow Jones industrial average rose 9.76 points to 5,636.64, ++ ending the week with a loss of 51.67 points, or 0.93 percent. The 30-stock average registered a record Monday and climbed as high as 5,709.97 the following day before falling back.

Among broad market indexes, the Standard & Poor's 500 index gained 1.43 to 650.62, bringing its weekly gain to 9.19 points, or 1.43 percent. The Nasdaq composite index rose 2.43 to 1,102.22, ending the week with a gain of 2.64 points, or 0.24 percent.

About 1,329 shares rose and 968 fell on the New York Stock Exchange. Some 329.6 million shares changed hands on the Big TTC Board, below the three-month daily average volume of 418.1 million shares.

Trading volume has fallen below its three-month average in each of the past three days. Analysts attributed some of the decline to a drop in market volatility that is, stocks aren't swinging in the wide range they did during the first two weeks of March.

Bank stocks rose after a weeklong drop in bond yields showed signs of holding. The yield on the benchmark 30-year Treasury bond was at 6.64 percent, up from 6.62 percent Thursday. For the week, the yield fell 9 basis points.

Wells Fargo & Co. rose $1.25 to $248.50; NationsBank Corp. gained $1.25 to $75.25; BankAmerica Corp. rose $1.625 to $75.75; and Banc One Corp. rose 62.5 cents to $35.75.

Federal National Mortgage Association rose 62.5 cents to $32.75 and Beneficial Corp. gained 62.5 cents to 55.75.

"The assumption of this stronger growth continuing has been called into question, and that's better for rates," said Kate Lunstrum, chief investment strategist at Duff & Phelps Investment Research.

General Motor Corp.'s stock fell 25 cents to $53.375 after rising as high as $54.50 earlier. United Auto Workers at two GM plants in Dayton, Ohio, approved a settlement of a 17-day strike. Analysts estimate the strike cost GM $850 million.

Pub Date: 3/23/96

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