Computer Trading Pushes Dow Up 20.90

NEW YORK — Wall Street stocks soared at the close Monday, propelled by a late burst of computer-driven trading that sent the Dow Jones industrial average above 2,700 for the first time in three weeks getting Wall Street off to a positive start for the last quarter of 1989.

The Dow Jones average of 30 industrials rose 20.90 to 2,713.72, its highest close since it stood at 2,719.79 on Sept. 6.

Advancing issues led declines by 854 to 594.

Big Board volume was 127.41 million shares, down from 155.30 million in the previous session. Nationwide, consolidated volume in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 150.85 million shares.

“It was very selective buying,” said Tom Gallagher, Oppenheimer & Co.’s head of block trading, noting that about a dozen Dow stocks were weak despite the sharp closing gain.

“There are an awful lot of cross-currents going on in the market. Breadth is not particularly great and the market has no real leadership,” he added.

Analysts said traders had been braced for a pullback in the absence of the end-of-quarter buying by investing institutions that helped support the market last week.

But in early trading prices steadied after a brief and shallow decline, suggesting that the market faced little selling pressure.

The results of a monthly survey of corporate purchasing executives, released Monday, showed continued softness in the manufacturing sector of the economy during September.

Brokers noted, however, that the report contained few surprises for investors, and actually indicated a modest improvement from August.

USX, which said it was looking for buyers for the oil and gas reserves of its Texas Oil & Gas subsidiary, climbed 1 3/4 to 34 7/8, making a health contribution to the Dow’s gain.

Coca-Cola, meanwhile, rose 1 1/2 to 68 1/2. The company said it would realize a $500-million-plus profit from the sale of its stake in Columbia Pictures Entertainment to Sony Corp.

Directors also authorized the repurchase of as many as 20 million shares through 1991.

Elsewhere among the blue chips, General Electric rose 1 1/4 to 57 3/4; Exxon 3/8 to 45 1/8; Eastman Kodak 1 5/8 to 48, and DuPont 2 1/4 to 122.

Harcourt Brace Jovanovich led the active list, down 1 7/8 at 10 1/4 on top of a 4 1/8-point drop Friday. The selloff was attributed to disappointment over the $1.1-billion price at which HBJ agreed to sell its theme parks to Anheuser Busch.

Kellogg dropped 2 1/4 to 73 1/8. The company said it expected to report lower earnings for the third quarter, citing intense competition in the ready-to-eat cereal business.

On the Tokyo Stock Exchange, stocks closed mixed in a combination of buying and profit taking. Trading was moderate. The Nikkei 225-share index, which slipped 53.22 points Friday, eased 13.79 points to 35,622.97.

Shares closed moderately lower in light trading on continued worries over a possible hike in British interest rates. The Financial Times 100-share index closed 10.2 points lower at 2,289.2.

Credit

Bond prices closed moderately higher in listless trading as traders were generally pessimistic about the outlook for interest rates.

The Treasury’s benchmark 30-year bond rose 1/4 point, or $2.50 per $1,000 face amount, while its yield, which declines when prices rise, slipped to 8.21% from 8.23% late Friday.

Short-term issues were unchanged.

The market “probably should have been up more,” said economist Ward McCarthy, a managing director of Stone & McCarthy Research Associates Inc. “With such little activity, the market failed to generate more momentum.”

Investors were looking for indications of whether the Federal Reserve might relax credit, nudging interest rates lower and allowing bond prices to rise in the process. But the market shrugged off the purchasing managers report and a Commerce Department report that construction spending rose 1.8% in August, its first advance in three months.

The Fed was in the bond market briefly Monday, taking part in what McCarthy described as transactions “intended to be neutral.” However, traders were so pessimistic that they interpreted the Fed’s moves as indicating that the central bank would not relax credit, he said.

The federal funds rate, the interest on overnight loans between banks, was quoted at 9.063%, up from 8.50% late Friday.

Currency

The dollar rose in quiet trading, resisting continued intervention by central banks to weaken the U.S. currency.

“Trading was dominated by profit taking with central bank intervention less effective,” said Ronald Holzer, currency broker with Harris Trust & Savings Bank.

The U.S. Federal Reserve and foreign central banks continued for the second consecutive week to sell dollars in a concerted effort to push the dollar lower.

Last week the U.S. currency lost more than 4% of its value against the West German mark and Japanese yen. The action has followed a recent agreement by the Group of Seven industrialized democracies that the dollar’s recent rise was “inconsistent with longer run economic fundamentals.”

The seven nations in the group are the United States, Britain, Japan, France, West Germany, Italy and Canada.

In Tokyo, the dollar ended slightly lower at 139.30 Japanese yen, compared to 139.35 at Friday’s close. In late London trading, the dollar was at 139.25 yen. In New York, the dollar traded at 139.70 yen, up from 139.05.

Commodities

Cocoa futures prices plunged to a 16-year low on New York’s Coffee, Sugar & Cocoa Exchange on indications that more cocoa from the Ivory Coast may be headed for an already overburdened world market.

On other commodity markets Monday, cotton futures rallied strongly, grains and soybeans were sharply higher, most energy futures fell, and livestock and meat futures were mixed.

Cocoa settled $25 to $34 lower, with the contract for delivery in December at $1,008 per metric ton.