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Late Surge Puts Dow Up 103, Within Sight of Its Record

Markets: Broad-based rally is led by financial stocks; bond yields ease. Analysts cite rate cuts and lessening worries about overseas economies.

November 21, 1998| From Times Wire Services

Stocks shot higher Friday as a late surge gave the Dow Jones industrial average another triple-digit increase and left the blue-chip index just 178 points off its record high.

The Dow rose 103.50 points, or 1.1%, to 9,159.55, giving it a 239.96-point increase for the week, which was dominated by the Federal Reserve's decision Tuesday to lower interest rates by a quarter of a percentage point.

Just six weeks ago, the market had slid below 7,500 amid investor concerns about the world economy. The Dow is now up about 1,275 points for the year and within sight of its 9,337.97 record high reached July 17.

"Six weeks ago, no one would have dreamed we would have come back so fast," said Alfred Kugel, senior investment strategist at Chicago-based SteinRoe & Farnham Inc., which manages about $25 billion.

"The real changes are that the authorities in all parts of the world are taking steps to head off the worst fears that people had of a global deflationary recession."

On Friday, advancing issues outnumbered decliners by a 7-5 margin on the New York Stock Exchange. Volume totaled 717 million shares.

Stocks pushed higher in many sectors, from drugs to the Internet to telecommunication services. The technology-laden Nasdaq and broader stock indicators also rose.

Banks and financial service stocks were among the front-runners as investors grew more confident that lower interest rates will spark the economy with more borrowing and spending.

"Thanksgiving and Christmas time is a good time for the markets," said Charles Pradilla, chief investment strategist at SG Cowen Securities.

"We seem to have gotten the end-of-year tax-loss selling over early, and the news has just gotten better and better."

He said the economic worries abroad have lessened, taking away a major reason for the late-summer market correction.

Improving overseas markets, especially Japan, are pushing the upswing in the United States, said Douglas Porter, senior economist for Nesbitt Burns Securities of Chicago.

Tokyo stocks jumped on Friday, with the Nikkei-225 index up 3% at 14,779.94.

European markets were also hot. Germany's DAX index was up 2.4%, Britain's FTSE-100 rose 2% and France's CAC-40 gained 2.6%.

"At the depths of the downturn in the equity markets in early September, there was a view the world economy was headed for a deep recession," Porter said. "Those concerns have been lifted."

On Wall Street, the Standard & Poor's 500 index was up 1% at 1,162.34, and the Nasdaq composite index rose 0.4% to 1,927.23.

The small-stock Russell 2,000 index eased by a sliver.

In the bond market, yields were mixed, although longer-term Treasury yields eased, ending lower for a second week.

The 30-year T-bond finished at 5.22%.

Among Friday's highlights:

* Advancing financial sector stocks included Merrill Lynch, up $4.25 to $71.50; Bankers Trust, up $5.44 to $77.44; and Lehman Bros., up $3.63 to $45.38.

"Banks and financials are in the best position to gain from stabilization in world financial markets and an easing by the Federal Reserve," said Thomas O'Neill, chief investment officer at Fleet Investment Advisors Inc. in Boston, which oversees $50 billion.

* In Nasdaq trading, online bookseller Amazon.com continued its amazing climb, rising $26.25 to $179.50 after the company declared a 3-for-1 stock split late Thursday.

Meanwhile, rival Barnes & Noble was down $3 to $29 on the NYSE.

* Among the big technology winners were semiconductor stocks, which benefited from a positive report showing increasing demand for chips. Motorola was up $3.44 to $61.69.

* Some oil stocks gained on expectations that Organization of Petroleum Exporting Countries may consider more production cuts when they meet next week in Vienna, to drive crude prices higher.

Exxon rose $2.13 to $72 and Royal Dutch Petroleum gained 94 cents to $47.75.

* DaimlerChrysler rose $3.50 to $91.63 after the world's No. 5 auto maker said it plans to spend $40 million to expand its Tuscaloosa, Ala., plant to keep up with demand for its Mercedes-Benz M-Class sport-utility vehicle.

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