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U.S. Stocks Post Modest Gains

Stocks made a half-hearted attempt at extending Friday afternoon's rally Monday, with blue-chip shares ticking to moderate gains as the broader market languished in negative territory.

The Dow Jones Industrial Average advanced 32.96 points, or 0.4 percent, to 8,566.61. The Dow had run up as much as 85.48 points by 9:58 a.m. ET.

"The problem now is that we're trying to grope for a bottom, but the market's breadth is negative," said Gregory Kuhn, head of Kuhn Asset Management Co. "So, I don't see the market as a screaming buy opportunity. We have a lot more work to do in here."

Friday, the Dow snapped back from a 283.21-point morning deficit to close down 77.76 points, or 0.9 percent.

Influential Goldman Sachs' strategist Abby Joseph Cohen remains bullish. In a research report released Monday, she said Wall Street shares are undervalued by 5 percent to 8 percent, reiterating her year-end price targets of 9,300 and 1,150 for the Dow and S&P 500 indexes, respectively.

Cohen said Russia, Brazil, and Venezuela are the three biggest concerns for global investors, yet they account for less than 4 percent of U.S. exports when combined.

In Russia, the benchmark RTS stock index surged 5.7 percent following the latest political shakeup. On Sunday, Russian President Boris Yeltsin fired Prime Minister Sergei Kiriyenko, replacing him with Victor Chernomyrdin. Yeltsin had ousted Chernomyrdin five months ago after losing confidence in the speed at which Chernomyrdin was implementing economic reforms.

In other overseas action, Japan's Nikkei 225 index fell below the important 15,000-point level for the first time in a week, dropping 2.3 percent to 14,988.36. The tumble was greased by pessimism that the government will be able to shore up its crippled banking system.

In particular, Japanese investors are uncertain whether parliament will enact bills to allow the use of public funds to help Long-Term Credit Bank of Japan in its merger with Sumitomo Trust and Banking.

In Hong Kong, the government intervened in the stock market for the sixth-straight day, snapping up shares and stock futures contracts to fend off speculators, who drove the market to a five-year low earlier in August. The benchmark Hang Seng index advanced 4.2 percent.

European markets were mixed. Germany's DAX index rose 1.4 percent and France's CAC 40 index eased 0.2 percent.

In Latin America, Venezuela's IBC index gained 0.2 percent, Brazil's Bovespa index lost 2.5 percent, and Mexico's IPC index gave up 1.6 percent.

Within the U.S. stock market, volume was sluggish in keeping with the pattern of most Mondays.

In Monday's market highlights:

  • The Standard & Poor's 500 Index rose 0.6 percent.
  • New York Stock Exchange losers overtook winners by an 8-to-7 margin.
  • On the Big Board floor, 563 million shares crossed the tape.
  • The Nasdaq Composite declined 0.4 percent. Declining issues topped advancers by 8 to 5 in the Nadaq Stock Market. Volume totaled 585 million shares.
  • The Russell 2000 Index of small-capitalization stocks sank 0.5 percent.
  • In the bond market, the 30-year Treasury declined 11/32, to yield 5.464 percent. On Friday, the benchmark yield broke the 5.50 percent barrier to touch down as low as 5.373 percent before finishing at 5.439 percent. The yield was the lowest since the government began regularly issuing the maturity in 1977.
  • Ciena gained 4 7/8 to 36 1/8. On Friday it lost 45 percent of its market value, dropping 25 1/2 points after AT&T indicated it will cease evaluating products of the telecommunications equipment supplier. On Monday, Ciena said its fundamental prospects are unchanged, AT&T's decision notwithstanding.
  • Tellabs shed 4 3/8 to 58 1/8. The company said it plans to push Ciena to alter the terms of their proposed merger in light of AT&T's decision.
  • Belden slipped 6 5/16 to 18 5/16. The cable and wire manufacturer believes 1998 net will be 15 percent to 20 percent lower than the year-ago level due to weakness in domestic markets and greater-than-expected softness in certain overseas markets.
  • Eastman Kodak rose 7/8 to 85 5/8 on a positive article in Barron's over the weekend. Wall Street anticipates earnings growth of 27 percent and 17 percent in 1998 and 1999, respectively.
  • Computer network security software developer CyberGuard plunged 4 5/16, or 70 percent, to 1 7/8. It said it will restate its fiscal third-quarter results in light of a review of its revenue-recognition methods. It also temporarily took its chief executive and chief financial officer off the job. On Friday, KPMG Peat Marwick LLP, CyberGuard's auditor, resigned.