Wall Street put inflation fears behind it Thursday and rallied-a good, old-fashioned summer rally with the only missing ingredients lemonade and a baseball game.
The Dow Jones industrial average rose 34.97 points to 3739.25, its second gain in a row and its highest close since June 20. The Nasdaq index, which soared nearly 10 points Wednesday, added another 2.21 points to close at 721.56. Volume on the Big Board was hefty, 322 million.
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Advancers led decliners by a 3-to-1 margin.
The star of the day was Chrysler, which reported the second quarter was its most profitable three months ever. Its stock actually fell, by 75 cents to $49.37, on profit taking, but the news that a big automaker could make nearly $1 billion-$956 million to be exact-in three months cheered the rest of the market.
The rally also was helped by strength in the bond market, where the benchmark 30-year Treasury issue rose, pushing down its yield to 7.53 percent from 7.67 percent Wednesday. Bond yields and prices move in opposite directions.
Big gainers among Chicagoland stocks included Morton International, up $2.75 to $85.37; Stone Container, up $1.25 to $16.25; Zebra Technologies, up $1.25 to $37.25; and Sara Lee, up $1.75 to $21.25.
But underlying all the fun was a continuing sense of unease. The Nasdaq index was chugging under a full head of steam in midafternoon when Cisco Systems told analysts the company may not meet earnings expectations.
Computer-networking stocks then fell broadly. Cisco sank $4.25 to $19.75, more than relinquishing Wednesday’s $1.25 gain. Cabletron Systems tumbled $5.25 to $105, after gaining $4.25 Wednesday. Chipcom closed down $1.37 at $45.37 after soaring $7.25 Wednesday. 3Com slid $2 to $53.75 after advancing $3.87 in the previous day’s trading.
Heartland report: Among the low sheds and towering furnaces of Chicagoland’s steel industry, a U-shaped industrial belt at the southern tip of Lake Michigan, you can find new evidence of industrial might.
The steel industry became a symbol of American inefficiency in the 1980s, losing a quarter million jobs and its reputation for quality to Japanese and other foreign competitors. But steel has come back.
It’s leaner, cleaner and once again profitable. The red soup called air that used to hang over the Skyway has become thin enough to see through. And the bottom lines of the companies that stir the soup once again have become respectable.
Acme Metals of Riverdale, the nation’s smallest integrated steel operation-meaning it makes steel from iron ore and limestone rather than exclusively from scrap-turned in record net income and earnings for the second quarter.
Acme’s profits totaled $6.9 million, or $1.20 a share, up from $2.1 million, or 38 cents a share, for the year-earlier period. Wall Street applauded, sending the stock up $2.37 to $25.75.
Brian W.H. Marsden, chairman and chief executive officer, said the increase was due to an array of factors, including better prices, an improving economy and an ongoing program to upgrade equipment and improve quality and efficiency.
– Bally Entertainment of Chicago has more in mind than a good time with its continuing purchase of the stock of gaming company Circus Circus Enterprises.
Arthur M. Goldberg, chairman and chief executive officer of Bally, said he is ruling nothing out as the company moves forward with stock purchases. Bally has received federal antitrust clearance to buy between 10 and 25 percent of the troubled entertainment giant. It currently owns 680,000 of 86 million shares outstanding, or less than 1 percent.
“We think it (Circus Circus) might make an interesting business combination at some time,” said Goldberg. “You never know what’s going to happen.”
Members of Circus Circus’ board, who think a takeover bid is in the works, are getting together to discuss a defense.