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Reagan Comment on Tax Hike Cited : Dow Gains 14; Rally Cools Late in Session

November 17, 1987|From Times Wire Services

NEW YORK — Stock prices advanced Monday, encouraged by a sharp rise in the dollar. But they ended well below their best levels after President Reagan rattled investors by speaking out against new taxes.

The Dow Jones industrial index finished up 14.09 points at 1,949.10. The blue chip index had surged 35 points earlier in the day on Reagan's weekend declaration that he was confident that the federal budget deficit could be slashed by $80 billion over two years.

The market has been waiting for Washington to unveil a plan to cut the budget deficit, but Reagan unsettled traders when he said in a speech Monday that raising taxes to cut the deficit would be "the wrong step."

Reagan's opposition to new taxes has raised concerns that the negotiations may run into more snags. "Wall Street is watching Washington, and it will react up or down depending on what's said about the budget," a trader said.

The Dow sputtered when it appeared that no plan to cut the deficit would be announced Monday, but it recovered in the last half-hour of trading to post a gain.

Advancing issues outnumbered declines by about 5 to 4 on the New York Stock Exchange, with 864 up, 689 down and 424 unchanged.

Big Board volume totaled 164.34 million shares, against 174.92 million in the previous session.

The dollar rose in foreign exchange markets around the world following Reagan's weekend statement that negotiators were close to agreement on a plan to reduce the federal budget deficit.

However, once the details of any agreement are known, analysts say, the focus of attention may shift to its prospective effect on the economy and other matters.

Among actively traded blue chips, Ford Motor rose 1 5/8 to 77; American Telephone & Telegraph gained 1/8 to 29 1/2; Exxon climbed 5/8 to 41. IBM dropped 1 5/8 to 120 and General Electric was down 5/8 at 45 3/8.

The Wilshire index of 5,000 equities closed at 2,404.675, up 9.643.

Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 186.81 million shares.

Standard & Poor's index of 400 industrials rose 1.48 to 282.60, and S&P's 500-stock composite index was up 0.79 at 241.99.

The NASDAQ composite index for the over-the-counter market slipped 0.60 to 322.37. At the American Stock Exchange, the market-value index closed at 251.37, off 0.07.

Prices on the London Stock Exchange finished well off their highs of the day. The Financial Times-Stock Exchange 100-share index rose 6.4 points to close at 1,684.7 after gaining more than 50 points earlier in the day.

In Tokyo this morning, the Nikkei stock average of 225 selected issues, the market's key indicator, shed 146.75 points to finish the morning session at 22,468.68. The index had risen 167.18 points Monday, capping a three-day gain.

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