Wall St pushes to post-crash high

Press, 26 June 1989, Page 28

Wall St pushes to post-crash high

NZPA-AP New York The New York stock market rallied sharply to new postcrash highs on Friday (early Saturday, New Zealand time) in buying encouraged by fresh evidence of a slowing American economy.

The Commerce Department reported in the morning that new factory orders for durable goods fell 4.2 per cent in May. Wall Street had been expecting them to be unchanged or slightly higher. Analysts saw the surprise decline as a sign that the economy may be slowing more dramatically than forecast. That stirred talk of a possible business slump. But brokers said it also raised expectations of falling interest rates and reduced inflation. In the credit markets, prices of long-term United States Government bonds soared about SUSIS for each SUSIOOO in face value, lowering their yield to the 8.18 per cent to 8.23 per cent range. Since early (northern) spring those bond interest rates have fallen more than one percentage point. Optimists in the financial world argue that as evidence of a weakening economy mounts, the Federal Reserve System will relax its credit policy to cushion the impact of the “landing.” The Dow Jones average of 30 industrials jumped 49.70 points to close at 2531.87, surpassing the previous closing high since the crash in October

1987 of 2517.83 it reached on June 2. The gain, the largest for the average in six weeks, left it with a net rise of 45.49 points for the week. Advancing issues outnumbered declines about five to two on the New York Stock Exchange, with 1065 up, 430 down, and 474 unchanged. Volume totalled 198.72 million shares, compared with 176.51 M in the previous session. The week began with the Dow Jones falling 6.49 points to close at 2479.89 in subdued atmosphere after Friday’s “triple witching hour.” (Program trading involving a group of expiring index options and futures). The Dow fell another 7 points in dull trading on Tuesday, only interest in airlines spurring the market. This followed a proposed 5U53.65 billion buy-out of NWA Inc. Strength in airlines issues pushed the Dow transport index up seven points. Airlines continued to gain on Wednesday, but a late burst of futures-related selling triggered by weakness in the United States dollar took the Dow down for the third day in succession, this time by eight points. The release of the Federal Reserve’s "Tan Book,” a monthly economic survey, had little effect on the market. "It was nothing to get excited about,” said Mr Jack Barbanel, senior vice-presi-dent of Gruntal and Com-

pany. “The report said there is a slowdown but the economy is still strong,” Mr Barbanel said. Shares of the big three car makers were weak after a Kidder Peabody analyst, Mr John Kirnan, recommended investors sell auto shares. Mr Kirnan said he expected tepid sales and earnings next year at Ford, Chrysler, and General Motors. Ford shares fell 3/ 8 to 48%, GM shares dropped % to 40, and Chrysler lost % to 25%. However, on Thursday, prices began to rise, helped by futures-related program buying. The Dow closed 17 points up.

Several airlines continued their rise.

"There is also some win-dow-dressing going on. When you are adjusting your portfolio, it is much easier to go into the more liquid blue-chip issues," said Mr Monte Gordon, director of research at Dreyfus. Window-dressing is a practice done near the end of a quarter or a fiscal year in which fund managers adjust their portfolios by replacing losing positions with stocks that have gained in value.

Newmont Mining jumped 5% to 40% on speculation that the company would be up for sale if Hanson Pic succeeded in its bid for Consolidated Gold Fields. Cons Gold owns 49 per cent of Newmont. A Newmont Mining affiliate, Newmont Gold, added two to 33%.

Prices of a selection of stocks on the New York Stock

Exchange on Friday, in points equal to SUSI. — AlcanAlu 22%, Alcoa 69, Allied Sig 34%, AMAX 25%, Amßrands 72, AmExpress 34%, AmHomeProducts 96%, AmeradHes 37%, Armco 11%, Asarco 28%, Atlßichfield 93%, ATT 37, Avon Prod 34%, Bankamer 28%, BethStl 23, Boeing 51%, Borden 70%, BristolMy 49%. Caterpillar 59%, CBS 207%, Chrysler 25%, Citicorp 32%, ClarkEqp 38%, Coca Cola 59%, Colgate 52%, ComwEdison 38%, ContlData 23, Crane 27, Corning Glass 40, Digital 92%, Dow Chem 87, East Kodak 48%, Englhrd 21, Exxon 44%, Fluor 31, Ford 49%, FrptMcmor 35, Gen Dynamic 57%, GenElec 54%, GM 41%, Gencorp 16%, Goodyear 54%, GraceWß 32%, Greyhound 33%, Grumman 21%, GTEC 55%, Gulfßes 11, HJHeinz 54%, Haliburton 30%, Homestake 13%, Honeywell 75%, IBM 110%, INCO 28%, IntlPaper 47%, ITT 59%, JandJ 50%, JPMorgan 39, KMart 36%, Lockheed 48%, Mattel 14%, McdonDoug 77%, Mcdonald’s 30%, MerrylLynch 29%, Merck 69%, MMM 73%, Mobil 49%, Monsanto ill, Navistar 5, NCR 54%, NewmMin 39%, Occidental 27%, PacGasEl 20%, Pfizer 59, PhelDodge 58%, PhilipMor 142%, PhilipsPe 22%, Polaroid 39, ProctGam 114%, Raytheon 74, ReynMetal 54%, Searsßoe 44%, ShellTr 39%, Schlumberger 38%, Tandy 47, Tenneco 55%, Texaco 49%, Texaslnst 42%, Timken 37%, UnionCarb 28, Unisys Corp 64.