U.S. Stocks Rise For Second Straight Session
By Huw Jones
NEW YORK (Reuters) - Stocks scored solid gains for the second straight session Monday as investors expressed relief that investigator Kenneth Starr's report to Congress was less damaging to President Clinton than had been feared.
The Dow Jones industrial average jumped 149.85 points, or 1.9 percent, to 7,945.35, after rising 180 points Friday. In the broader market, gainers beat losers by nearly a 2-1 margin on active volume of 710 million shares on the New York Stock Exchange.
The Nasdaq composite index rose 24.05 points, or 1.5 percent, to 1,665.69.
The gains extended a rally that started late Friday on relief that the report from independent counsel Starr was less damaging than feared for Clinton.
''What we are seeing is a relief rally that started last Friday and continuing on its own after the market over-corrected,'' Robert Froehlich, chief investment strategist at Scudder Kemper Funds, said.
''The reality is that when Starr's Monicagate report was downloaded onto the Net Friday afternoon, there was a sense of relief that the report was not as damaging to Clinton as might have been the case,'' said Philip Orlando, chief investment officer at Value Line's Asset Management.
Talk of concerted action by global leaders to soothe financial markets, including possible interest rate cuts, helped fuel the rebound in stocks, analysts said. Lower rates tend to boost economic growth, and corporate profits, thus bolstering stocks.
Meanwhile, Clinton called for a meeting of world financial leaders to discuss how international institutions would cope with the spreading economic crisis that has gripped Asia and Russia.
He also said major industrial nations should ''stand ready'' to use some $15 billion in International Monetary Fund emergency funds to help stop the financial contagion from spreading to Latin America and elsewhere.
Starr's report into Clinton's relationship with former White House intern Monica Lewinsky listed 11 potentially impeachable offenses, but Clinton's lawyers said there were no grounds for such action.
Last week, Wall Street began expecting some coordinated action by government leaders and the Federal Reserve to tackle emerging market turmoil that has spread from Asia, through Russia and into Latin America.
A pre-Labor Day hint by Fed chief Alan Greenspan that the Fed has dropped its bias toward higher rates was seen as a first step toward lower rates, helping stocks.
Officials from the leading industrial nations said they agreed to support the International Monetary Fund as it helps economies hit by recent market turmoil, and remained committed to ensuring stability and growth in their own economies.
The so-called Group of Seven said it also needed to cooperate within the group, further kindling hopes of rate cuts.
''We think Germany and possibly the U.K. will lower rates over the next two weeks, and chairman Greenspan will follow'' when Fed policy-makers meet Sept. 29, Orlando said.
The Fed helped draft the G7 statement. Greenspan, along with Treasury Secretary Robert Rubin, will address Congress Wednesday when investors will look for further hints of possible rate cuts.
Clinton also weighed in with a speech in New York Monday, calling for coordinated action to tackle global finances.
Some of Monday's gains were due to Friday's quarterly expiration of stock options and futures, analysts said.
The Standard & Poor's index of 500 stocks rose 20.66 to 1,029.72. The American Stock Exchange index rose 6.09 to 619.30.
The NYSE composite index of all listed common stocks rose 10.18 to 510.21. The average share gained 79 cents.
The Wilshire Associates Equity Index -- the market value of NYSE, American and Nasdaq issues -- was 9,378.576, up 171.8, or 1.87 percent.
The dollar rose against the German mark and Japanese yen Monday, riding an impressive stock market rally that came amid hopes for stability in Washington politics and emerging market economies.
However, dealers said dollar sentiment remained cloudy, with the greenback unable to rally strongly following last week's market turmoil and amid continued speculation that the Federal Reserve would lower interest rates soon.
In late trading, the dollar was at 132.53 yen, up from 130.73 at the close Friday and slightly higher at 1.6965 marks from 1.6960.
Traders said stock markets extended Friday's rally, as independent counsel Kenneth Starr's report of the scandal surrounding President Clinton was deemed as providing little new, nor more damaging accusations.
''The relief rally that is running through the marketplace is directly a result that there's nothing in the report that is new, but it's not really working in the currency market,'' said Hillel Waxman, vice president at Bank Leumi Trust Co.
Traders said the dollar drew modest support on hopes that industrialized nations would band together in stemming global economic crises. The Group of Seven finance ministers said their nations agreed to a common approach to support reforming countries, including support for efforts led by the International Monetary Fund.
The G7 comments followed similar words from Clinton, who said he asked Federal Reserve Chairman Alan Greenspan and Treasury Secretary Robert Rubin to hold a meeting with other monetary officials to discuss ways to cope with spreading economic crises.
''With positive statements from Clinton, the IMF and G7, people are at least making efforts in letting markets know that (global economic concerns) are a priority and that they will attempt to do something to improve the situation,'' Robert Lynch, currency analyst at Paribas, said.
Traders said the officials' comments should ease some pressure on the dollar, which had been hit by emerging market problems and their prospective impact on the U.S. economy, but there was still a lack of enthusiasm for the currency.
Some analysts speculated comments from Clinton and the G7 added pressure on the Fed to cut rates at its policy-making meeting Sept. 29. A Fed easing has already been factored into the dollar, but the currency could suffer more in the short term, they said.
The dollar gained on the yen in Tokyo trading as Japanese opposition parties would not accept a compromise on key banking reform bills offered by the ruling Liberal Democratic Party, threatening to prolong the process of disposing of as much as $1 trillion in bad loans.
In other trading, the dollar was higher at 1.3992 Swiss francs from 1.3900 Friday but down at Canadian $1.5042 from C$1.5140. The British pound rose to $1.6780 from $1.6740.
In addition, gold prices fell Monday with investors showing relief in the recovery in stock markets and the dollar as well as indications that President Bill Clinton may be censured, not impeached, over a sex scandal.
dailynews.yahoo.com
So can the markets score a three day rise? So far so good overseas! I say yes unless that changes.
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InvestRight
Regards, Jeff
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