clarinews@clarinet.com (JANICE KIRKEL, UPI Business Writer) (02/03/90)
NEW YORK (UPI) -- The stock market rebounded from its steepest weekly loss since the week of the October mini-crash, gaining on a break in the recent sharp rise in interest rates. The Dow Jones industrial average rose 16.44 Friday to close at 2602.70 for a gain of 43.47 points on the week, or about 1.7 percent. Among the broader market averages, the New York Stock Exchange composite index rose 2.54 points to close the week at 182.75. Standard & Poor's 500-stock index gained 5.12 to 330.92. Advances led declines 1,009-856 among the 2,142 issues traded this week. Big Board volume totaled 845,526,810 shares, compared with 906,436,420 a week earlier and 934,030,950 a year ago. After worries about the junk bond market and whether Soviet leader Mikhail Gorbachev would resign sent the market to lower closes Monday and Tuesday, Wall Street responded on Wednesday to a break in the half-point rise in long term interest rates during January with its biggest rally since a 56-point surge to record highs Jan. 2, the first trading day of the year. The Dow industrials surged 47 points on the rebound in bond prices Wednesday, which was particularly good news to investors since the rally in bonds came on the heels of a bigger-than-expected December jump in the index of leading economic indicators. Bonds jumped more than 1 point, bringing yields down and sparking hopes that interest rates may have seen their highs for now. The bond market spent the rest of the week marking time before the Treasury's quarterly refunding, but the stock market gained more ground Friday when a strong January employment report and a pickup in takeover-related activity fueled gains. The job data eased worries about a recession anytime soon, showing an unchanged jobless rate and the creation of more new jobs than had been expected. And the market was glad to see more of what made it sizzle through the 1980s -- corporations looking to gobble up one another. On Friday, Roche Holding Ltd., owner of Hoffmann-LaRoche, agreed to buy half of drug maker Genentech for $36 a share. And reports said the Belzberg family of Canada, long active in the world of corporate takeovers, has hired a financial advisor in connection with its investment in Armstrong World Industries Inc. Analysts also cited the new bid earlier this week for Georgia Gulf from NL Industries, controlled by investor Harold Simmons, and talk over the last few days about a new buyout bid for UAL, parent of United Airlines. Simmons also sought to raise his stake in Lockheed to almost 19 percent and to gain seats on the company's board but late Friday, Lockheed said it turned down Simmons' request. ``Confidence about takeovers is back in the market,'' said Tom Gallagher, managing director in charge of capital commitment at Oppenheimer and Co. Gallagher also said data such as the job report Friday served as a sign to investors that the economy is ``growing gradually, not too fast. And if the economy is growing, if you look out a little, earnings will get better,'' he said, citing bad corporate earnings as the main culprit in the market's 200-point drop in January. ``There are some sentiments that this market will fool everyone on the upside,'' he said. But other analysts saw the week's improved showing as simply a technical rebound from very depressed levels. ``This is purely technical in nature,'' said Brad Weekes, senior vice president in charge of sales and trading at Donaldson, Lufkin and Jenrette Securities Corp. ``We could get up to 2625 or 2630, but that'll probably be it on this move.'' The week also saw the resignation of New York Stock Exchange Chairman John Phelan Jr. after six years on the job. ``It's really a non-event for the market,'' said Weekes, ``but he did preside over the bull market, and the crash, and an incredible growth period with great expansion of volume. I think he did a terrific job. I hope the next person will do as good a job.'' On the trading floor this week, AT&T was the most active NYSE issue, up 1/4 to 39 3/8. New Germany Fund followed, up 1/8 to 24 1/8. Philip Morris was third, up 1 1/4 to 38 1/4. Among the other blue chips, IBM was up 1 1/2 to 98 3/8, General Electric was down 3/4 to 61 3/4, Texaco was up 1 1/8 to 57 1/2, and Exxon was up 1 1/8 to 47 7/8. On the takeover front, Genentech surged 8 1/2 to 29 7/8, UAL sank 19 1/2 to 130 1/2, with the decline coming early in the week before renewed takeover speculation, CBS soared 16 5/8 to 189 and Earle Jorgensen rallied 10 3/8 to 40 1/4 after agreeing to a takeover. Banks and financial issues rallied on the break in the interest rate surge. Chase Manhattan rose 3/4 to 30 1/2, Citicorp jumped 1 3/8 to 24 3/8, CNA Financial jumped 5 1/2 to 83 5/8 and troubled Bank of New England, which said it was progressing with asset sales, climbed 1 3/4 to 5 1/4. On the American Stock Exchange, the Amex Market Value index rose 0.10 to close Friday at 353.56. Declines led advances 480-345 among the 994 issues traded. Amex volume totaled 69,888,835 shares, compared with 84,143,370 traded a week earlier and 66,229,695 traded in the same week a year ago. B.A.T Industries led the Amex actives, up 9/16 to 13 5/8. The National Association of Securities Dealers index rose 0.89 to end the week at 422.22.