Relative calm in overseas markets Wednesday gave Wall Street a chance to relax and bargain hunters a chance to plow back into big-name computer-technology stocks.
The dollar strengthened against foreign currencies after the Russian government barred certain Russian banks from acquiring dollars or other foreign currencies, a move designed to shore up the Russian ruble.
The Dow Jones industrial average gained 90.11 points, or 1.1 percent, to 8552.96, on New York Stock Exchange volume of 708 million shares. The broader Standard & Poor’s 500 index added 15.24, or 1.4 percent, to 1084.22, as advancing issues outnumbered losers by more than 5-2 among NYSE-listed stocks.
J.P. Morgan, one of Tuesday’s big decliners, led Wednesday’s rally among the 30 Dow industries. The banking giant rose $3, to $118.50, as investors sensed that Tuesday’s market sell-off on Asian economic worries was an overreaction.
The Nasdaq composite index, which technology stocks dominate, rose 32.83, or 1.8 percent, to 1825.53, and the Russell 2000 index of small-company stocks jumped 7.94, or 2.0 percent, to 408.55.
The Treasury’s auction of $11 billion in 10-year notes was sold at a yield of 5.43 percent. The Treasury will sell $10 billion of 30-year bonds Thursday, after the release of the government’s report on retail sales in July. Analysts are expecting a slight decline in July retail sales, largely because of weak auto sales during the strike against General Motors.
Crude-oil and precious-metals prices continued to slip. Crude oil for September delivery fell 5 cents a barrel, to $12.71, and gold for December delivery fell $1.20 an ounce, to 286.80.
Oil stocks rallied for a second day in the wake of the British Petroleum/Amoco merger, announced Tuesday. Amoco gained $1.31, to $48.19. Bear Stearns issued a “buy” recommendation on Amoco.
One of Wednesday’s biggest losers was CheckFree Holdings, a Georgia-based developer of electronic commerce systems. Shares plummeted $9.81, to $13.94, after the company said it expects to post a loss in its fiscal first quarter.
CheckFree blamed the current wave of bank consolidation that has diverted bankers from new technologies while they attempt to digest mergers and prepare for any Year 2000 computer problems.
In after-hours trading, the stock of high-end retailer Nordstrom jumped after the firm posted better-than-expected second-quarter results. The company credited inventory control and cost-cutting moves, despite a weak gain of 0.2 percent in same-store sales from the year-earlier quarter.
Elsewhere, speculation mounted that Germany’s Dresdner Bank will acquire PaineWebber Group, the fourth-largest U.S. brokerage. PaineWebber stock jumped $4.25, to a record closing high $52.62.
From Russia with IOU: Developments in Russia have emerged as a key part of the global deflation story being told by many market analysts.
On Wednesday, Russian finance officials pledged to cover debt securities coming due in the weeks ahead and said there would be no devaluation of the ruble.
Russia has about $20 billion in short-term debt securities coming due in the next six months and is having a hard time rolling over the debt with fresh borrowing, despite current yields as high as 140 percent.
At the Chicago Mercantile Exchange, rubles for September delivery fell 16.4 percent, to 12.50 cents per ruble, a new low, according to Bloomberg News.
“They say they would cover their commitments for a month,” one trader told Bloomberg. “That doesn’t really inspire confidence. People are still worried about what will happen this fall.”
Speculation that Russia will devalue its currency and seek another international bailout grow, despite government denials.
Billionaire investor George Soros called for a devaluation, saying Russia’s financial markets had “reached a terminal phase,” according to Reuters. He suggested a new currency pegged to the dollar or euro.
IPO chill: Recent stock market volatility has cooled the atmosphere for initial public offerings.
Late Wednesday, Cincinnati-based Convergys, a spinoff from Cincinnati Bell that provides outsourced customer billing service, announced a scaled-down offering of 13 million shares at $15 a share. The deal, involving a relatively mature business with a track record of earnings, had received favorable previews from analysts. The IPO initially was billed at 18 million shares priced between $17 and $19.
Other IPO deals expected to emerge this week apparently have been postponed.
On the other hand, Internet-related IPOs remain hot. GeoCities, which offers personal Web sites on the Internet, jumped $8.37, to $45.50, in its second day of Nasdaq trading Wednesday. After a somewhat confused debut Tuesday, the stock soared from the IPO price of $17.
Local news: A Salomon Smith Barney analyst predicted that Oak Brook-based Great Lakes REIT and Chicago-based Prime Group Realty Trust would be part of a nationwide wave of consolidation among real estate investment trusts that could eliminate half the existing companies. Great Lakes rose 31 cents, to $16.19; Prime Group added 6 cents, to $17.19. REIT stocks have performed poorly so far this year.
– Morgan Stanley initiated research coverage of post-secondary education services provider DeVry, Oakbrook Terrace, with an “outperform” rating. The stock gained 81 cents, to $19.31.
