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FINANCIAL MARKETS : Yields Tumble as Stocks Gain; Dow Up 28.26

November 15, 1994|From Times Wire Services

Treasury bond yields plummeted Monday, pushed by a stronger dollar and technical factors a day before a Federal Reserve Board meeting that is expected to produce the year's sixth increase in short-term rates. Stocks rose sharply.

The bellwether 30-year bond yield fell to 8.07% from 8.15% on Thursday. Its price, which rises when rates fall, was up 13/16 point, or $8.13 per $1,000 face value. The government securities market was closed Friday, Veterans Day.

On Wall Street, the Dow Jones industrial average rose 28.26 points to 3,829.73. Advancing issues outnumbered declining ones by about 11 to 9 on the New York Stock Exchange.

The Fed's Open Market Committee was widely expected to raise short-term interest rates at least half a percentage point today in its continuing effort to cool the economy and stave off inflation.

Investors bought bonds Monday, hoping the Fed's action would support higher prices. Bond investors like any strong move against inflation, since rising prices erode the value of securities, such as bonds, that pay a fixed interest rate.

The dollar's gain was spurred by foreign buyers anticipating stronger stocks and bonds, stemming from renewed confidence in the Fed's desire to curb inflation.

Reports of heavy overseas dollar buying by big investment funds and selling of German marks for Swedish kronor after Sweden voted Sunday to join the European Union also helped the U.S. currency, market participants said.

The dollar was also aided by Treasury Secretary Lloyd Bentsen's comment that he was pleased with the recent U.S. intervention to boost the dollar.

In New York, the dollar finished at 1.544 German marks, up from 1.530 on Friday and the highest level since Oct. 14. The dollar was changing hands at the rate of 98.31 Japanese yen, up from 97.68.

The Mexican currency fell . The dollar was quoted in New York at 3.451 pesos, compared to 3.443 pesos Friday.

Stocks moved up sharply as lower rates and the dollar's strength helped investors put aside worries about inflation. Big Board volume was 260.61 million shares.

Broader market indexes also moved higher. The NYSE's composite index rose 1.59 points to 254.84. Standard & Poor's 500-stock index rose 3.69 points to 466.04. The Nasdaq composite index climbed 6.02 points to 768.14; on the American Stock Exchange, the market value index edged up 0.68 point to 448.72.

Among the market's highlights:

* Powersoft rose 7 7/8 to 69 1/4. The company and Sybase said they would merge. Powersoft shareholders will receive 1.6 Sybase shares for each Powersoft issue. Powersoft will operate as an independent subsidiary of Sybase. Sybase fell 2 1/16 to 46 5/16.

Other software stocks posted gains. Among them were Gupta, up 1 and 13/16 to 12, and Microsoft, which launched Internet Assistant and rose 2 1/4 to 64 1/2.

* Chiron rose 2 3/4 to 74 1/4. The company is reportedly negotiating to sell a 49% stake to Swiss drug and chemical maker Ciba-Geigy for nearly $2 billion.

* Eastman Kodak rose 1 7/8 to 47 5/8. Prudential Securities upgraded the stock to "buy" from "hold."

* Citicorp rose 5/8 to 45 7/8. Merrill Lynch upgraded its near-term rating of the shares to "above average" from "neutral."

Stocks ended mixed abroad. Mexico's Bolsa fell 40.35 points to 2,486.64 . London's Financial Times 100-share average rose 19.4 points to 3,095.3; in Frankfurt, the DAX 30-share average closed at 2,089.29, up 10.94 points. Tokyo's Nikkei average fell 22.91 points to 19,261.45.

Market Roundup, D10

Interest Rates

30-year T-Bond: 8.07%

1-year T-Bill: 6.49%

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