Dow leaps 155 points after Fed acts gently

1.15 billion shares trade

Nasdaq surges 44 points to a record 2,652

Wall Street

July 01, 1999|By BLOOMBERG NEWS

NEW YORK -- Stocks soared yesterday, with some market indexes smashing through to record highs, as the Federal Reserve raised interest rates a quarter-point and hinted that a single, modest increase might be all that is needed to keep the lid on inflation.

The Dow Jones industrial average rose 155.45 to close at 10,970.80, rounding out a session in which the index dropped 83 points in morning trading, then popped over 11,000 for the first time since May 14.

The rally propelled broader market indicators to new closing highs. The Standard & Poor's 500 index rose 21.26 points to 1,372.71, beating its previous record of 1,367.56 reached May 13. The S&P 500 rose 1.6 percent yesterday and 5.4 percent in the past month.

The Nasdaq composite index rose 44.01 to close at 2,686.12, eclipsing the previous high of 2,652.05 set April 26. And the Wilshire 5,000 index jumped 205.66 to a record 12,583.60.

In addition, the S&P 400 midcap index added 1.48 to a record 416.70; the New York Stock Exchange composite index climbed 10.14 to 648.13, just three points shy of its high; and the American Stock Exchange composite index rocketed 20.45 to 797.93, also about three points from a record.

Maryland shares rise

The Russell 2,000 index, a benchmark of small-cap stocks, rose 3.60 to 457.68, and the Sun-Bloomberg Maryland index, representing the top 100 Maryland stocks, gained 1.54 to 195.58.

About five stocks gained for every three that fell on the New York Stock Exchange. About 1.15 billion shares traded on the Big Board in what was the NYSE's fifth-busiest day ever.

Bond prices, battered for weeks by the threat of inflation and higher interest rates, also recovered, sending yields on the 30-year Treasury bond falling to 5.96 percent from 6.06 percent late Tuesday.

This quarter, the Dow average, laden with industrial stocks such as Alcoa Inc. that do best when the economy is expanding, returned 12 percent. Alcoa gained $1.0625 to $61.875 yesterday.

J. P. Morgan & Co. Inc. rose $4.75 to $140.50, the strongest gainer among Dow components. Morgan Stanley Dean Witter rose $7.875 to $102.625, and Charles Schwab gained $8.875 to close at $109.

SBC Communications Inc. gained $3.50 to $58; Bell Atlantic Corp. added $4.9375 to $65.375; and Ameritech Corp. rose $3.50 to $73.50.

MCI WorldCom Inc., the most active stock in trading of 55.8 million shares, fell $7.5625 to $86.0625 amid reports of a Justice Department antitrust investigation of its undersea cable business. Also, one Wall Street analyst predicted an industry price war as the companies struggle for competitive position.

Oil stocks gained as crude rallied to a 19-month high of $19.29 a barrel after reports showed that U.S. oil inventories fell unexpectedly while motor-fuel demand strengthened.

Chevron Corp. gained $1.375 to $95.0625; Texaco Inc. rose $1.25 to $62.375; Halliburton Co. advanced $1.875 to $45.25; and Schlumberger Ltd. added $2.375 to $63.6875.

Phelps Dodge Corp. rose $2.9375 to $61.9375 after the No. 1 U.S. copper company said it will trim production and fire 12 percent of its workers, the latest effort by producers to ease a worldwide copper glut. Copper prices surged 3 percent to their highest this year on the London Metal Exchange.

General Motors Corp. rose $1.875 to $66 and Ford Motor Co. gained $2.875 to $56.4375, recouping from interest rate fears, said Nicholas Lobaccaro, a Lehman Brothers auto analyst. "With rates being nudged up a notch instead of being jacked up, the sales and profitability environment for the industry is going to be very robust."

Disney and Coke gain

Walt Disney Co. was lower for much of the session after Merrill Lynch analyst Jessica Reif Cohen forecast lower earnings for fiscal years 1999 and 2000, but the ebullience of the afternoon session lifted the shares 68.75 cents to close at $30.8125.

Coca-Cola Co. rose 81.25 cents to $62 after saying it expects business to pick up in the second half after three years of stagnant sales as the world's economies rebound. Coke gets three-quarters of its profit overseas. Inc. jumped $5.875, or 45 percent, to $18.8125, after the company that provides free electronic mail to World Wide Web sites said 14 Internet service providers will use its e-mail services. first sold shares to the public two weeks ago.

Overseas, Japan's Nikkei stock average fell 1.42 percent. European indexes were mostly higher, as Germany's DAX index was up 0.4 percent, Britain's FT-SE 100 rose 0.2 percent, and France's CAC-40 rose 0.7 percent.

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