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Foreign Buyers Pace Stock Market Rally; Dow Advances 45.43

December 08, 1987|From Times Wire Services

NEW YORK — Wall Street broke through its recent gloom Monday with a strong rebound inspired by a slightly brighter view of the economy and a stronger dollar. However, analysts cautioned against interpreting the session's narrow rally too rosily.

The Dow Jones average of 30 industrials jumped 45.43 to close at 1,812.17, a 2.57% rise and the index's 14th-largest point gain.

While the Dow average's climb appeared healthy, volume remained relatively low and the broader market showed only a slight price increase, indicating that "this is not a strong market," said Hildegarde Zagorski, a market strategist with Prudential-Bache Securities.

Gainers outpaced losers by 9-to-7 on the New York Stock Exchange, with 902 stocks up, 703 down and 387 unchanged.

Big Board volume totaled 146.66 million shares, against 184.80 million on Friday.

The market gained on the strength of a firmer dollar in foreign exchange.

Analysts said foreign investors, who were encouraged by speculation that the Reagan Administration's policy has shifted in favor of supporting the dollar, did most of the buying.

"There was an influx of foreign buying, particularly the Japanese," who stepped in early in the day in search of blue-chip issues, said Michael Metz, a market strategist with Oppenheimer & Co.

Domestic investors remained bearish, however.

"The sellers decided to step away" and see where the market would go, said Metz, noting that there was not a great resurgence in demand but rather a hold on selling that affected trading.

Suspect Rally

While some blue-chip issues enjoyed well-sustained price gains, "the majority (of stocks) the public owns--the secondaries--were still under some patch pressure," said Jack Solomon, an analyst with Bear, Stearns & Co.

Analysts were reluctant to predict whether the market had bottomed and that the day's rise could portend larger gains ahead. "It is a very suspect rally," Metz said.

"People just don't trust (the market); they're skeptical," Solomon said. But that very environment of pervading pessimism "could permit the market to rally when everyone is asleep at the wheel," he said.

Analysts also said the stronger-than-expected November U.S. employment data reported Friday had contributed to a less bleak view of the economy. Unemployment fell to an eight-year low in the month, helping the dollar maintain its recently steady tone.

But a more critical economic indicator, the report of U.S. trade accounts for October, is due out Thursday and its pending arrival kept investors anxious. Previous trade reports have been turning points for the dollar and stocks.

Bank Issues Fall

Among the gainers, Teledyne rose 4 1/2 to 274; Dow Chemical added 4 to 76 1/2; Digital Equipment rose 4 to 117 3/4, and Merck climbed 4 3/8 to 157 7/8.

Other advancers included Telex, which rose 9 3/4 to 51 1/2 after the company announced it had received an acquisition proposal from Memorex International NV.

Losing issues included Honeywell, down 1 to 51 3/4, and Allied Signal, which fell 3/4 to 26 1/8.

Banking issues came under pressure as "Argentina said it might pose a moratorium on debt payments to foreign institutions," Metz said. The Federal Deposit Insurance Corp. also said Monday that the nation's banks may end the year with the lowest overall earnings since 1934.

Manufacturers Hanover fell 1 3/8 to 24 7/8; Chase Manhattan slipped 1 to 21 7/8; Citicorp dropped 3/4 to 16 5/8, and Chemical retreated 1/2 to 23 3/4.

Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 170.98 million shares.

The NYSE's composite index rose 2.32 to 128.23.

Standard & Poor's index of 400 industrials rose 6.53 to 261.96, and S&P's 500-stock composite index was up 4.84 to 228.76.

The Wilshire index of 5,000 equities closed at 2,223.364 up 35.254 from Friday's close.

The American Stock Exchange market-value index rose 1.13 to 233.03. The NASDAQ composite index closed at 294.77, up 1.85.

In foreign trading, prices on the London Stock Exchange moved higher, with the Financial Times-Stock Exchange 100-stock index closing up 15.6 at 1,598.

On the Tokyo Stock Exchange, the 225-issue Nikkei average shed 86.89, finishing at 22,586.52.

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