clarinews@clarinet.com (JANICE KIRKEL, UPI Business Writer) (02/01/90)
NEW YORK (UPI) -- The stock market ended January the same way it began the month, as a break from the recent jump in interest rates fueled the market's biggest rally since its surge to record highs Jan. 2. The Dow Jones industrial average, which fell 10.14 Tuesday, its fifth straight decline, surged 47.30 to close at 2590.54, its sharpest rise since a 56-point burst Jan. 2 to a new all-time high. Among broader market gauges, the New York Stock Exchange composite index rose 3.07 to 181.50 and Standard & Poor's 500-stock index gained 6.08 to 329.06. The price of an average share jumped 57 cents. Advances pounded declines 1,111-446 among the 1,966 issues crossing the NYSE tape. Big Board volume totaled 189,660,000 shares, compared with 186,030,000 shares traded Tuesday. The rally was fueled by a rebound in bond prices after their steep January declines. Especially heartening to investors was that bonds gained despite a government report early Wednesday that the index of leading economic indicators, a gauge of future economic activity, rose 0.8 percent in December. Economists had expected the index to rise only 0.5 percent. Analysts said Treasury bonds, which were lower, dipped slightly on the news but then turned higher at midmorning. In late trading, long-term issues were up as much as 1 1/8 points. They said the bond market's firm reaction to a stronger-than-expected economic report, which would normally be bearish for bonds, may be a signal that interest rates have seen their highs for now. ``The bond market's behavior in managing a stronger-than-expected number was positive,'' said Hugh Johnson, chief economist at First Albany Corp. in Albany, N.Y. ``It suggests the (bond) market might be reaching a level where it's turning. Stock folks saw this and I think that was the catalyst for the gains,'' he said. ``This was great to see, a good sign, an encouraging sign,'' said Johnson. Johnson also noted that stocks have had five straight down days and said he felt the market was also simply due for a rebound. He also said Wednesday's statement by Soviet President Mikhail Gorbachev that he has no intention of resigning as chief of the Communist Party was a supportive factor. Radio Moscow said Gorbachev made the denial in remarks to reporters at a reception for visiting Brazilian President Fernando Collor de Mello. A report carried by the Cable News Network Tuesday said Gorbachev was preparing to resign as general secretary of the party because of frustration with implementation of domestic reforms. The report briefly sent stocks tumbling Tuesday before they rebounded. On the trading floor, Occidental Petroleum was the most active NYSE issue, unchanged at 26 5/8. Bank of New England followed, up 1/4 to 4 7/8. AT&T was third, up 1 1/4 to 39. Among the other blue chips, IBM jumped 1 3/8 to 98 5/8 after announcing a joint venture Tuesday with Motorola to market a wireless data communications service, Union Carbide rose 1 1/8 to 22 1/8, and Dow components reporting earnings helped boost the blue-chip average. Philip Morris gained 7/8 to 37 7/8, USX rose 1 1/8 to 33 1/2 and Coca-Cola surged 2 5/8 to 68 7/8 after reporting steep gains in profits. Other companies that were sharply higher after favorable earnings reports were Xerox, up 2 3/8 to 55 1/2; Asarco, up 1 5/8 to 28 1/2; and Ogden Projects, up 2 5/8 to 24. Takeover issues rebounded after their recent shellacking. Hilton Hotels surged 4 to 61 3/4 amid talk that its board may approve the sale of the company. Aristech Chemical jumped 1 1/4 to 26 1/2. Its board has reportedly approved a $27-a-share management buyout. And Georgia Gulf soared 4 5/8 to 40 7/8 after NL Industries said it planned a $45-a-share bid for the company. Interest-sensitive issues gained on the relief from the rise in interest rates. Federal National Mortgage Association jumped 2 to 31 1/4, Federal Home Loan Mortgage Corp. climbed 2 5/8 to 61, and Student Loan Marketing Association added 1 5/8 to 43 3/8. Volume of NYSE-listed issues, including trades in stocks on regional exchanges and in the over-the-counter market, totaled 221,763,750 shares, compared with 215,386,740 shares traded in the previous session. Prices closed sharply higher in moderately active trading on the American Stock Exchange. The Amex Market Value index rose 4.57 to close at 350.07. The price of an average share gained 17 cents. Advances led declines 320-258 among the 817 issues traded. Composite volume totaled 15,553,100 shares, compared with 19,383,100 traded Tuesday. Hillhaven led the Amex issues, unchanged at 1 7/8. The National Association of Securities Dealers composite index gained 5.09 to 415.81.