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Stocks Rally, Spurred by Asian Rebounds

January 14, 1998|From Times Wire Services

U.S. stocks posted their best performance of the new year Tuesday, led by the technology sector, as investors grew hopeful that share prices already reflect the damage to U.S. businesses from Asia's economic turmoil.

The Dow Jones industrial average rose 84.95 points to 7,732.13, the blue-chip barometer's biggest gain in two weeks.

Broad-market indexes also rose sharply, with the technology-laden Nasdaq composite rising 34.05 points, or more than 2%, to 1,541.63. And, by contrast with Monday's narrow blue-chip focus, smaller-companies' shares also posted sizable gains.

"The market's recovering from an excessive bout of selling in recent days. People are settling down about a number of issues," said Peter Canelo, U.S. investment strategist at Morgan Stanley Dean Witter, adding that most of the latest readings on the U.S. economy suggest enough strength to help compensate for the Asian slowdown. "My guess is that we'll muddle through this."

A rally on several battered markets in Southeast Asia helped spur a strong opening on Wall Street, and the buying accelerated in the afternoon despite an impending fourth-quarter profit report from Intel, a bellwether for the computer industry with heavy exposure to Asia's sagging fortunes.

Intel closed up $1.31 at $76.94. After the closing bell, it posted fourth-quarter earnings of 98 cents a share, soundly beating Wall Street estimates of 90 cents. Last year, the No. 1 chip maker earned $1.06 a share in the quarter.

With faith in corporate profits restored, investors were less attracted to bonds and the safe harbor they offer. The price on the key 30-year Treasury bond fell, pushing its yield up to 5.73% from 5.69%.

Trading on the New York Stock Exchange was very heavy again, with more than 600 million shares traded for the seventh straight session. Advancing issues outnumbered decliners by a 5-to-2 margin on the NYSE.

The Standard & Poor's 500-stock index rose 12.91 points to 952.12, and the NYSE composite index rose 6.14 points to 497.75. The Russell 2,000 index of smaller companies rose 7.56 points to 418.44.

Among Tuesday's highlights:

* The Dow's biggest gainers were J.P. Morgan, up $3.69 to $106.88; AT&T, up $2.81 to $65.19; Travelers Group, up $2.38 to $49.63; and IBM, up $2 to $102.13.

* Buoyed by Wall Street's firm showing Monday, several of Asia's most troubled markets rebounded on Tuesday.

In Jakarta, stocks rose 9.1% after President Suharto pledged to adopt tough reforms needed for that nation's economic recovery. Singapore's market jumped 4.6% after seven days of steep losses, and Kuala Lumpur's climbed 5.8%. In Hong Kong, stocks rose 7.4% after tumbling to a three-year low on Monday.

On other foreign markets, Tokyo's Nikkei stock average rose 0.6%, Frankfurt's DAX index rose 1.8% and London's FTSE-100 rose 0.3%.

The Asian market comeback pushed the dollar down against the Japanese yen. The dollar fell to 131.72 yen from 132.69 yen.

In commodity markets, corn and wheat prices sprouted after the U.S. Agriculture Department indicated supplies might be smaller than expected in coming months.

The crop report, which showed the lowest amount of land planted with winter wheat--45.6 million acres--in 25 years, prompted strong gains in wheat prices. At the Chicago Board of Trade, March wheat rose 12.25 cents to $3.34.

In its final estimate of last fall's corn crop, the department said the 9.37 billion bushels harvested was the third-largest on record. But it was below the 9.38 billion bushels grain traders had expected.

Corn for March delivery closed up the 12 cent-per-bushel allowable daily trading limit at $2.70.

Market Roundup, D11

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