Wall St posts sharp gains

Press, 27 January 1988, Page 33

Wall St posts sharp gains

NZPA-Reuter New York Wall Street stocks posted sharp gains on Monday (early yesterday NZ time) as strength in takeover-rated issues spread through the broader market.

Steady bond and dollar markets and the absence of heavy program trading lifted investors’ confidence, analysts said.

The Dow Jones industrial average rose 42.94 points to 1946.45. Advancing NYSE issues led losers by nearly a 3-to-l ratio. Traders said nearly two-fifths of the day’s trading volume was due to attempts to capture dividends about to be paid out by Southern Company, Cincinnati Gas and Electric and Pinnacle West Capital Corporation. Alfred Goldman, portfolio strategist at A.G. Edwards and Sons in St Louis, said that with Friday’s 24-point gain, the market staged a rally counter to its over-all downward trend. Another factor that aided the market’s drive up is its historical propensity to move up before a State of the Union message, Mr Goldman said. But he predicted that the advance would falter as the Dow approached 1970.

Trude Latimer, analyst at Josephthal and Co, was more positive. “It was an extraordinary day,” she said, noting the strength that spread beyond the drug and retail sectors. The market got an early boost from news last week that Eastman Kodak Co. had agreed to buy Sterling Drug Inc. for $U589.50 a share, and that Federated Department Stores Inc. had received a SUS 47 a share take-over bid from Campeau Corp.

Meanwhile, in London shares were drifting at their lows in what dealers described as “seriously low” levels of trading. An early advance on Wall Street gave institutional investors little incentive to enter the market. The FTSE 100 index was down 13.6 to its low of 1757.3 by mid-after-

noon. Volume recorded by the Stock Exchange Automated Quotation System (SEAQ) was 205.2 million shares.

Some dealers suggested institutional cash found its way into government bonds, which rose by more than half a point.