Stocks roar, Dow up 149 Strength abroad helps, as does absence of new jolts in Starr report

Market prefers Clinton

Wall Street

September 15, 1998|By Bill Atkinson | Bill Atkinson,SUN STAFF Bloomberg News contributed to this article.

The stock market rallied for a second straight session yesterday, fueled by sharp increases in foreign markets and a sense that the worst of the whirlwind engulfing the Clinton White House was over, industry experts said.

The Dow Jones industrial average rose 149.85 points, or 1.92 percent, to 7,945.35, in a day when wild swings -- the trademark of recent sessions -- were largely absent.

Yesterday's boost helped push the closely watched index of blue chip stocks up more than 329 points in the last two days of trading, nudging it back into positive territory for the year. Experts attributed the rise in part to the absence of new bombshells in independent counsel Kenneth W. Starr's report Friday, which alleges that President Clinton lied and abused his power to cover up an affair with White House intern Monica Lewinsky. Before Friday's release of the report, traders had feared that it could surprise investors and prompt them to sell in a panic.

"There are no new revelations, just details of an old thing," said Larry Wachtel, a market analyst at New York-based Prudential Securities Inc. "The polls, while they express revulsion have not called for him to resign."

Wachtel said Wall Street, which has been shaken by uncertainty surrounding Clinton, would rather see him serve out his presidency.

"The devil we know is the devil that can stay," Wachtel said.

The Standard & Poor's 500 index, a broader measure of the stock market, gained 20.66 points, or 2.05 percent, to 1,029.72 yesterday. The Nasdaq composite index, composed of leading technology companies such as Dell Computer Corp. and Microsoft Corp., rose 24.05 points, or 1.46 percent, to 1,665.69.

Among other broad indexes, the Russell 2,000 index of small capitalization stocks rose 4.10 to 357.72; the Wilshire 5,000 index gained 171.80 to 9,378.58; the American Stock Exchange composite index added 6.09 to 619.30; and the S&P 400 midcap index rose 6.43 to 306.74.

The Sun-Bloomberg Maryland index, which tracks the top 100 Maryland stocks by market valuation, gained 2.74 to 179.44.

Advancers outpaced decliners 2 to 1 on the New York Stock Exchange, where about 710 million shares changed hands.

There had been plenty of encouraging news to prime the market for another gain. Japan's Nikkei 225 index jumped 2.23 percent on news that Japanese officials are closer to agreeing on a plan to save the nation's crumbling banking industry.

European markets also rose as officials from the world's largest industrialized nations met in London and insisted that Russia would have to make economic reforms to get more financial aid.

And, in a speech in New York, Clinton said he has asked Federal Reserve Chairman Alan Greenspan and Treasury Secretary Robert Rubin to meet with officials from other industrialized nations on worldwide financial problems.

But market strategists said problems in Asia, Russia and now Brazil will continue to shake the U.S. market as well as the economy.

"The overseas problems are not going to go away soon," said David Straus, senior portfolio manager with Washington-based J. Capital Management Inc. "I don't think we are going to see the kind of quick recovery that we have seen in the past."

Yesterday's rally was welcome. The correction that has gripped Wall Street has been so bad that the average decline for some 6,500 stocks traded on the New York Stock Exchange and the Nasdaq is about 40 percent from 52-week highs, experts said.

Now, the question is how long can the rally last?

"If we could string a couple of these good days in a row, I think investors would be a little more confident," said Richard Cripps, chief market strategist at Baltimore-based Legg Mason Wood Walker Inc.

Cripps said the Dow could rise another 500 points, and settle in the 8,000 to 9,000 range by year's end.

Straus said investors should take their time before buying stocks whose prices have fallen because there could be more bad news coming from overseas.

"You probably don't have to rush to chase stocks on strength here," he said. "You don't have to worry about missing things."

Merck & Co. rose $4.3125 to $132.3125 and Eli Lilly & Co. gained $1.3125 to $76.1875 after doctors at the European Congress of Osteoporosis conference said their new drugs offer new hope for treating osteoporosis. An estimated 200 million women suffer from the disease.

Financial services stocks, which had suffered the most in recent weeks, were among the biggest gainers. Citicorp jumped $5 to $101, after a summer slump sliced 51 percent from its market value. American Express Co. rose $3.3125 to $81.6875 and Merrill Lynch & Co. rose $1.8125 to $57.8125.

Deere & Co. fell $1.75 to $31.4375 after warning that fourth-quarter earnings will be lower than the year-ago quarter's 84 cents a share.

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