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Techs Lead Market's Rebound

September 02, 1998|From Times Staff and Wire Reports

Technology stocks led Tuesday's spectacular turnaround on Wall Street--just as they had led the plunge on Monday.

While the Dow Jones industrial average surged 288.36 points, or 3.8%, to 7,827.43, the Morgan Stanley high-tech stock index rocketed 7.3%. Tech leaders in the rally included Intel, up $4.81 to $76, and IBM, which zoomed $5.31 to $117.94.

Buyers also returned to some of the beaten-up consumer products stocks that had been trounced in the previous two sessions, when panicked investors seemed to be selling whatever they thought could fetch a bid on Wall Street.

The Morgan Stanley consumer stock index jumped 4.6%. It includes such stocks as Coca-Cola, which gained $3.13 to $68.25; Gillette, up $3.75 to $44.88; and Walt Disney, up $2.94 to $30.38.

Overall, winners topped losers by 2,017 to 1,221 on the New York Stock Exchange and by 2,496 to 1,920 on Nasdaq.

Trading volume topped 1.2 billion shares on the NYSE, a record that surpassed the old peak set Oct. 28.

The Nasdaq composite jumped 5.1% to 1,575.09 after losing 8.6% on Monday. The Russell 2,000 index of smaller stocks rose 3%.

"There was a legitimate deploying of funds because stocks have gotten very cheap very quickly, and there was some short-covering," said Scott Bleier, strategist at Prime Charter Ltd.

"The sellers have been washed out. Everyone has now factored in the risks of a weak political scene, Asia and Russia. The market now begins to climb a wall of worry."

Others aren't so sure. In any case, the Dow--which at its low on Tuesday was off more than 20% from its July peak, meaning it crossed the "official" bear market threshold--still is in the red for the year, down 1% year-to-date.

Many stock sectors are far more depressed than that.

The stock market's gain Tuesday was the bond market's loss, as some investors dumped fixed-income securities to buy equities.

The yield on the 30-year U.S. Treasury bond rose to 5.34% from Monday's record-low 5.27%.

Meanwhile, the dollar tumbled further against the Japanese yen as hedge funds continued to repay yen loans used to finance sinking emerging-market investments.

The dollar sank to 139.25 yen from 140.78 on Monday.

And the Malaysian ringgit surged against the dollar after the country said it would impose new foreign exchange controls--which promptly sent the Malaysian stock market to a 10-year low.

Among Wall Street's highlights:

* Battered bank stocks rose, including J.P. Morgan, up $4 to $97.50; Wachovia, up $3.13 to $76.44; and Chase Manhattan, up $2.38 to $54.88.

* Drug stocks were hot, led by Merck, up $6.56 to $122.50, and Warner-Lambert, up $6.38 to $71.63.

* In the tech sector, America Online jumped $3.06 to $85, Yahoo rose $3.25 to $72.25 and Lucent soared $7.13 to $78.

* Chrysler shot up $4.75 to $50 after it and Daimler-Benz said their recent stock declines won't hinder their planned merger.

In the commodity markets, prices rebounded from 21-year lows, led by gold and copper. The CRB-Bridge index of 17 commodities ended 2.99 points higher at 198.67.

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Main markets story, A1

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Market Roundup, D9

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