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Dow Muscles Its Way Back Above 7,000

May 01, 1997|From Times Wire Services

The Dow Jones industrial average pushed back above 7,000 on Wednesday as investors, emboldened by Tuesday's pleasing indications on inflation, shrugged off a more worrisome economic report.

U.S. bonds and the dollar also rose.

Broader stock measures enjoyed the day's biggest gains as bargain hunters sought out technology shares and other sectors that have lagged the Dow's rebound from the market's recent slide.

The Dow, which soared 179 points on Tuesday, rose 46.96 to 7,008.99, the blue-chip barometer's first finish above 7,000 since it began a 700-point slide on March 12.

The market extended a rebound that has seen the Dow recapture more than 600 of the 700 points it lost between March 11 and April 11. That sell-off was fueled by worries about the impact on the economy and corporate profits after the Federal Reserve Board raised interest rates in March.

The market's rise on Wednesday came despite a report of much-stronger-than expected first-quarter economic growth.

The Commerce Department reported the nation's gross domestic product expanded at a 5.6% annual rate in the quarter, its fastest pace in more than nine years. The GDP number was much stronger than Wall Street economists' forecasts for a 4.1% rate of growth.

But riding the enthusiasm over Tuesday's mild reading on employment costs, a key factor behind inflation, bond traders rummaged through the GDP report for suggestions that the economy's torrid pace is subsiding enough to avoid another increase in interest rates by the Federal Reserve.

The most encouraging discovery was a buildup in inventories that could force factories to slow production, particularly if the Fed's March 25 interest-rate increase cuts into consumer borrowing and spending.

Bonds also drew a boost from hopes that the White House and Congress may be close to a balanced-budget agreement, which would help ensure against a glut of Treasury securities weighing down the credit markets.

As bonds rebounded, the yield on the benchmark 30-year Treasury fell to 6.95% from 6.98% on Tuesday, the first time the widely watched yield fell below 7% in a month.

On the New York Stock Exchange, advancing issues outnumbered decliners by a 5-3 margin in heavy trading.

The Standard & Poor's 500-stock list rose 7.29 to 801.34, just 15 points shy of a record high and its first close above 800 since mid-March.

The NYSE composite index rose 3.32 to 416.94, and the Nasdaq composite index rose 18.13 to 1,260.76 as bellwether technology shares continued their sudden resurgence and capping its biggest three-day rally since August 1986.

Among Wednesday's highlights:

* The Dow's biggest gainers were IBM, up 2 1/8 to 160 1/2, and Boeing, which rose 2 3/8 to 98 5/8.

* Rising technology issues included Intel, up 3 1/8 to 153 1/8, and Microsoft, up 2 1/2 to 121 1/2. Cisco Systems climbed 1 3/4 to 51 3/4.

Apple Computer fell 11/16 to 17, after Oracle Chairman Larry Ellison said he's decided not to buy the company, at least for now.

Among companies reporting earnings, Columbia/HCA Healthcare rose 5/8 to 35 on results that met expectations.

In currency trading, the dollar hit a high of 127.14 Japanese yen before settling at 127.06 yen in late New York trading, up from 126.93 yen late on Tuesday. It touched 1.7348 German marks before ending at 1.7315, up from 1.7245 at Tuesday's close.

In commodities markets, soybean prices jumped after an influential U.S. agricultural consultant said in Buenos Aires that he expected prices to rise further.

At the Chicago Board of Trade, soybeans for May delivery jumped 22 to 8.89 1/2 a bushel after setting a new life-of-contract high of 8.93. That was the highest price for soybeans on the exchange since August 1988.

Overseas, Tokyo's Nikkei stock average rose 2.6%, Frankfurt's DAX index rose 1.6% and London's FT-SE 100 rose 0.1%.

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