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Stocks Rally on Anticipation About Japan

July 02, 1998|From Times Wire Services

NEW YORK — Stocks rallied and bonds were flat Wednesday, amid expectations that Japan will announce strong measures to boost its ailing economy.

The dollar was mixed, copper fell to an 11-year low, and grains tumbled.

The Federal Reserve Board, as expected, kept interest rates on hold, and a feeling that the worst of the second-quarter profit warnings were out of the way also boosted investor sentiment, analysts said.

The Dow Jones industrial average jumped 96.65 points to 9,048.67, ending above 9,000 for the first time in three weeks. Computer-driven buy programs helped fuel a late surge back above the psychological barrier, investors said.

Broad-market indicators also rallied over the final hour after posting modest gains for most of the day.

The Standard & Poor's 500 list rose 14.72 points to 1,148.56, closing at a new high for the fourth time in six sessions.

The Nasdaq composite index rose 19.72 points to 1,914.46, just three points shy of its all-time best finish of 1,917.61, set April 22. The technology-heavy index has now surged nearly 12% over the last two weeks.

The market opened strong amid news reports saying Japan's leaders are set to propose sweeping tax cuts to stimulate the sputtering Japanese economy.

Today, Japan is expected to unveil a proposal to clean up problem bank loans. Also, Prime Minister Ryutaro Hashimoto said the government will soon begin discussion of income tax cuts, the Jiji Press reported in Japan.

A stronger Japanese economy would help pull other Asian countries out of their economic crisis, improving prospects for American exporters.

Analysts, however, said Wednesday's gains were more a reflection of the renewed confidence that has taken hold over the last two weeks rather than any particular news.

In Washington, the Fed wrapped up a two-day meeting by leaving short-term interest rates unchanged, as Wall Street had expected. The yield on the 30-year Treasury ended unchanged at 5.62%.

Investors will be closely watching today's June jobs report before heading off for a long Independence Day holiday weekend. Financial markets are closed Friday.

Among Wednesday's highlights:

* The Dow's big gainers were Boeing, up $2.88 to $47.44; DuPont, up $2.31 to $77; and McDonald's, up $2.25 to $71.25.

* Leading Nasdaq higher were WorldCom, up $1.31 to $49.75; Intel, up $1.06 to $75.19; and Cisco Systems, up $2.50 to $94.56.

* Brokerages with stakes in Japanese firms rose. Merrill Lynch, which hired 2,000 former employees of the defunct brokerage Yamaichi Securities earlier this year, jumped $3.81 to $96.06. Travelers, which agreed last month to buy a 25% stake in Nikko Securities, gained $2.44 to $63.06.

* Nike gained $3.44 to $52.13 after the world's largest footwear company reported fourth-quarter profit of 4 cents a share, a penny ahead of estimates.

* Internet stocks soared on speculation that AT&T, America Online, CBS and others are shopping for Internet partners. Netscape Communications rocketed $8.63 to $35.69; DoubleClick jumped $14.31 to $64; Yahoo gained $12.38 to $169.88; and EarthLink Network rose $10.25 to $87.

In currency trading, the dollar was mixed as the Japanese yen benefited from hopes for a tax cut.

The dollar ended at 138.07 yen in New York, down from 139.16 at Tuesday's close.

Meanwhile in Tokyo, the Nikkei-225 surged 3.36%, its highest since April 10. The broader Topix index climbed 3.28%.

Market Roundup, D6

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