Advertisement
YOU ARE HERE: LAT HomeCollections

Market Savvy

Stocks Advance as Brazil Fears Ease; Dow Up 123

October 30, 1998| From Reuters

Stocks rallied sharply Thursday as concerns about Brazil's teetering economy eased and as more investors sought to get aboard the market's rebound.

Bond yields were marginally lower, and the dollar fell.

The Dow Jones industrial average ended up 123.06 points, or 1.5%, at 8,495.03.

In the broader market, advances led declines 1,847 to 1,149 on active volume of 699 million shares on the New York Stock Exchange.

The technology-laced Nasdaq composite index rose 19.84 points, or 1.1%, to 1,757.19.

The Russell 2,000 index of smaller stocks gained 0.8% to 374.48.

"Sentiment has turned more positive and the path of least resistance is up--not that the market is going to make huge progress," said Roy Blumberg, an analyst for First Allied Securities.

"Portfolio mangers have cash built up, and there is nothing more disquieting than having cash in a rising market, because you don't want to be left out," said Hugh Johnson, analyst at First Albany. "There is a growing sense of urgency to get that cash to work."

Brazil on Wednesday detailed an austerity plan that was expected to calm Latin American markets because it should avert a Brazilian currency devaluation. Such a devaluation could unleash a round of economically damaging competitive devaluations in the region.

But the market remained unsure about the chances of the plan's approval by Brazil's Congress.

The Brazilian stock market fell 4.2%, though other Latin American markets moved up.

Trading briefly came to a virtual halt on the NYSE as the space shuttle Discovery lifted off from the Kennedy Space Center in Florida, shortly after 2 p.m. EST. Traders gathered around television screens on the floor, standing as many as eight deep around monitors, to watch the event that would make Sen. John Glenn, 77, the oldest person to visit outer space. At liftoff, they cheered.

The latest round of U.S. economic numbers reminded Wall Street that inflation remains a threat.

The Employment Cost Index--a broad gauge of worker compensation that the Federal Reserve Board watches closely for signs of inflation--rose 1% in the third quarter after seeing a 0.9% rise for the April-June period.

Even so, the yield on the 30-year Treasury bond slipped to 5.08% from 5.12% on Wednesday.

Among Thursday's highlights:

* Drug stocks led health-care stocks higher, with Merck--which reported a 14% increase in quarterly profit earlier this month--rising $3.94 to $135.94.

* HMO stocks also rocketed in the aftermath of some decent earnings reports. Humana gained $1.75 to $18.13, and WellPoint Health jumped $9.69 to $71.94.

* Tech stocks continued to lead the market, with Micron Technology up $4.25 to $39.94, IBM up $2.56 to $148.75 and Sun Microsystems up $2.06 to $58.75.

In the Internet sector, Amazon.com surged $9.44 to $126.50 after having reported a strong quarterly sales gain on Wednesday.

* Merrill Lynch jumped $4.44 to $56.56, leading a rally in shares of Wall Street firms. The stock tumbled 65% from July 13 through Oct. 7 as Russia's debt default and currency devaluation cost securities firms hundreds of millions of dollars. Merrill alone lost $164 million in the third quarter, prompting it to cut 3,400 jobs.

"The market is looking past all the brokers' problems," said Steve Eisman, a CIBC Oppenheimer analyst. "It's saying, 'The Federal Reserve is on the case' " by lowering interest rates.

In currency trading, the dollar slipped to 1.653 German marks from 1.657 marks on Wednesday and fell nearly a full Japanese yen to 116.90 yen from 117.93.

*

Market Roundup, C8

Advertisement
Los Angeles Times Articles
|
|
|