Blue chips rebound from 86 down Dow industrials rise 29 points, but most indexes stay lower

June 08, 1996|By BLOOMBERG BUSINESS NEWS

NEW YORK -- U.S. stocks tumbled and then rebounded yesterday, led by metals and other economically sensitive shares, as the May jobs report suggested that the economy and corporate profits can grow fast enough to offset higher interest rates.

The Dow Jones industrial average recouped a loss of almost 87 points and closed 29.92 higher at 5,697.11. The Standard & Poor's 500 index also managed to erase its losses, closing 0.27 higher at 673.30. Even so, nearly three stocks fell for every one that rose on the New York Stock Exchange, and other market indexes declined.

The Nasdaq composite index dropped 2.76 to 1,229.76; the Wilshire 5,000 index tumbled 10.43 to 6694.13; the Russell 2,000 index slid 2.35 to 358.84; and the American Stock Exchange market value index fell 3.53 to 599.31.

The Labor Department said the economy added 348,000 nonfarm jobs in May, more than double the number that economists expected in a Bloomberg Business News poll. April's job gain was revised upward as well.

Bonds plunged after the report amid concern that the economy could accelerate enough to prompt the Federal Reserve to raise interest rates to contain inflation.

The Treasury's benchmark 30-year bond declined about 1 1/2 points, or $20 per $1,000 face amount.

The bond's yield, which rises when its price fall, climbed 14 basis points to 7.03 percent.

Among stocks showing strength, Alcoa gained $1.75 to $59.625 as Merrill Lynch & Co. reiterated its "buy" rating. United Technologies rose $2.25 to $114.375; Boeing rose $1.375 to $85.875; and Olympic Steel Corp. added $1.50 to $23.75.

Semiconductor shares also paced the market's rebound. Motorola Inc. climbed $1.50 to $65.625 and Micron Technology Inc. added $1.125 to $30.625.

International Business Machines Corp. rose 50 cents to $101.75. Drug shares were also swept up in the market's rebound after falling in early trading.

Eli Lilly & Co. climbed $1.125 to $67.25 and Pfizer Inc. gained $1.375 to $73.875.

Shares of banks, utilities and other companies sensitive to changes in interest rates declined.

Bank stocks were among the hardest hit. Citicorp skidded 87.5 cents to $84, and Chase Manhattan Corp. fell $1.25 to $71.75.

Among utilities, Southern Co. shed 37.5 cents to $22.75 and Duke Power Co. fell 37.5 cents to $48.625.

Pub Date: 6/08/96

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