Dow index zooms 232 points Blue chips recover most of last week's drop

November 04, 1997|By Bill Atkinson | Bill Atkinson,SUN STAFF Bloomberg News contributed to this article.

U.S. stocks soared yesterday, fueled by gains in overseas markets, and the Dow Jones industrial average recovered nearly all of what it had lost last week.

The Dow, the index of 30 blue-chip companies, jumped 232.31 points, or 3.12 percent, to close at 7,674.39. Twenty-seven of the Dow's 30 stocks registered gains of at least 1 percent.

The index is up 19 percent for the year, despite two days last week marked by huge gyrations. Last Monday, the index lost 554.26 points, only to gain 377.17 points back last Tuesday.

At yesterday's close, the Dow was just 41 points short of making up what it lost last week.

"Rock 'n' roll," said Claudia E. Mott, director of small-cap research at New York-based Prudential Securities Inc. "This definitely surprises me. A 3 percent move is still a lot in a day."

More than 573 million shares traded on the New York Stock Exchange, far less than the record 1.2 billion shares traded last Tuesday. On the Big Board yesterday, there were 2,368 stocks that rose in price and 653 decliners.

When the market opened, trading in some companies listed on the Big Board slowed significantly for the first hour because of a mysterious computer glitch that prevented investors from seeing the latest trade reports.

The problems are under investigation, said a spokesman for the Securities Industry Automation Corp., which is responsible for posting executions in the National Market System.

Many experts thought yesterday would be a dismal day for the market, as investors returned from the weekend and had time to think about the previous week's turbulence, which was sparked by problems in Asia.

Panicked investors overseas drove Hong Kong's Hang Seng stock index down nearly 14 percent in one day last week because of sweeping economic problems in Asian countries.

But yesterday, foreign markets were calm and the Hang Seng rose 631.33 points, or 5.94 percent, to 11,255.11.

"Fear has shifted to greed," said Robert Stovall, president of Stovall/Twenty-First Advisers Inc., which supervises about $1 billion in assets. "Some investors wish they'd bought more aggressively last week. Those who said they had too much exposure to stocks are now saying they don't have enough."

Other major U.S. indexes faired well in trading yesterday.

The Standard & Poor's 500 stock index rose 24.37 points, or 2.66 percent, to 938.99. It is up 26.76 percent for the year. The Nasdaq stock index, which consists of many big-name technology and health care companies, jumped 36.37 points, or 2.28 percent, to 1,629.98. And the Russell 2,000 index, made up of small stocks, rose 7.71 points, or 1.78 percent, to 440.97.

Among other broad market indexes, the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq stock exchanges, catapulted 208.47 to 9,073.72; the American Stock Exchange composite index increased 10.14 to 685.89; and the S&P 400 mid-cap index gained 6.58 to 323.47.

"I would love to see the market sort of settle down," said Robert Freedman, chief investment officer with Boston-based John Hancock Funds, which has $30 billion in assets under management. "Maybe the worst is over with. Maybe we will stay at this level and or a little higher."

Freedman sees the market trending a bit higher toward the end of the year. Strong corporate earnings in the fourth quarter should help bolster stocks, he said.

"We are probably not out of the woods," Freedman said. "A shot to the system will cause aftershocks."

Raymond F. DeVoe Jr., market strategist with Legg Mason Inc. in New York, sees the rest of the year as volatile, with the Dow ending the year in the 7,500 to 8,000 range "under the best of circumstances." He said the swift recovery has caused investors to relax.

"We have had our correction; now everybody is a bloody veteran and they can go on to better things," he said. "I think this is in the dangerous phase again. The complacency has been reinforced by amateur investors buying."

He said amateur investors may have spent all of their money buying stocks last Tuesday.

"If you have another downturn, it could be very painful," he said.

General Electric Co. led the Dow's advance yesterday, rising $2.50 to 67.125, as investors reacted to a executive's statement Friday that the company's 1997 earnings estimates are "OK" and that its exposure to troubles in Southeast Asia is small.

Brightpoint Inc., a member of the Russell 2,000, rallied $4.2188 to $37.2188 after the cellular telephone products distributor said it will acquire the business and certain assets of Cellular Trading 3 CA, a leading distributor in Venezuela.

Computer-related shares were among the day's biggest gainers, as last week's tumble created bargains that some investors found compelling.

Applied Materials Inc. rose $2.6875 to $36.0625; Xilinx Inc. rose $3.875 to $38; PeopleSoft Inc. rose $4.625 to $67.50; Linear Technology Corp. jumped $4.25 to $67.125; and Intel Corp. rose $1.50 to $78.50.

Dow's biggest gains

The Dow Jones industrial average had its third-biggest point gain yesterday, but the advance was not even close to being among the largest-percentage increases. In terms of points gained, here are the best days for the average, including the percentage change in value.

Date .. .. .. .. ..Points .. .. .. ..Close .. .. .. ..Pct.

Oct. 28, 1997 .. ..337.17 .. .. ..7,498.32 .. .. .. ..4.7

Sept. 2, 1997 .. ..257.36 .. .. ..7,879.78 .. .. .. ..3.4

Nov. 3, 1997 .. ...232.31 .. .. ..7,674.39 .. .. .. ..3.1

Oct. 21, 1987 .. ..186.84 .. .. ..2,027.85 .. .. .. .10.1

Sept. 16, 1997 .. .174.78 .. .. ..7,895.62 .. .. .. ..2.3

Pub Date: 11/04/97

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