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Rate Cuts in Europe Help Boost Wall St.

April 09, 1999|From Times Staff and Wire Reports

U.S. stocks' party kicked into higher gear Thursday as interest rate cuts in Europe helped send American bond yields lower.

The Dow industrials leaped 112.39 points, or 1.1%, to a record 10,197.70, while the Nasdaq composite also jumped 1.1%, to a record 2,573.39.

Rate cuts by the European Central Bank and the Bank of England triggered a rally in U.S. bonds, driving yields down sharply.

The yield on the bellwether 30-year Treasury bond fell to 5.44% from 5.51% on Wednesday, for the lowest level since Feb. 23.

The yield on the one-year T-bill eased to 4.62%, the lowest since Feb. 9.

The European cuts "make our bonds more competitive," drawing global investors to them, said Randy Bateman, who oversees $1 billion at Sun Trust Private Capital.

As rates fell, a rally in bank and utility stocks--beneficiaries of lower yields--paced the market's gains.

More important, the broad market also was much stronger than on Wednesday, when more stocks fell than rose despite a jump in blue-chip indexes.

On Thursday, winners topped losers by 17 to 13 on the New York Stock Exchange, but only by a handful of stocks on Nasdaq.

Stock markets worldwide have rallied this year on hopes that the global economy is poised for recovery after the crises that have hit East Asia, Russia and Latin America since mid-1997.

Still, the European rate cuts are a reminder that economic growth remains tenuous nearly everywhere except for the U.S.

Stocks in Europe closed modestly higher Thursday before the European Central Bank announced its rate cut. Those markets could rally strongly today, experts said.

Early today in Asia, markets were adding to Thursday's gains, on the heels of the European rate moves and Wall Street's surge.

Japan's Nikkei-225 index, up 1.8% on Thursday, crossed 17,000 early today--the first move above that level since March 1998.

Among Thursday's highlights:

* Bank stocks up sharply included J.P. Morgan, up $2.56 to $130; Citigroup, up $1.31 to $73; Chase Manhattan, up $3.50 to $87.88; Wachovia, up $2 to $84.50; and Mellon, up $2.06 to $73.25.

Also, the Dow utility index jumped 1.6% for the day.

* Oil stocks were strong despite lower crude oil prices. Chevron jumped $3.81 to $93.75 and Sunoco was up $1.38 to $36.75.

* Internet stocks were mixed despite Yahoo's strong earnings report late Wednesday. Yahoo eased $1.75 to $206.69 after trading as high as $217.

But Value America, a Net retailer backed by Microsoft co-founder Paul Allen, went public at $23 a share and rocketed to close at $55.19. The ticker symbol is VUSA.

Other Net issues rising included Amazon.com, up $3.19 to $179; VerticalNet, up $10 to $112; and America Online, up $2.50 to $160.50.

* On the downside, HMOs were among the biggest losers after Humana warned it will fall short of first-quarter earnings estimates. Humana slid $4 to $12.19. Among other HMOs, PacifiCare Class A dropped $4.13 to $56 and United HealthCare fell $6 to $44.69.

* Healthy March sales reports helped most retailers, including Dow component Wal-Mart, which rose $4.75 to $102.25.

Other winners included Home Depot, up $3.13 to $66.69; Circuit City, up $4.63 to $73.13; and Gap, up $4.38 to $72.75.

* A new stock issue that will garner attention today is Ravenswood Winery, which was priced at $10.50 a share late Thursday. It is the first new issue to be auctioned over the OpenIPO system from investment bank W.R. Hambrecht. Its Nasdaq ticker is RVWD.

Market Roundup, C6

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