Stock Prices Skyrocket as Rates Slide

Wall Street wiped out some of its recent losses Tuesday as the market soared to its biggest one-day gain since 1991, led by issues sensitive to economic cycles such as autos, heavy machinery and chemicals.

The market rallied sharply early on and never looked back, as investors responded in part to a jump in bond prices and a corresponding decline in market interest rates, analysts said.

The Dow jumped 82.06 to 3,675.41, a 2.28% advance and the largest increase for the index since Dec. 23, 1991. On that day the blue-chip average jumped 88.10 points.

In the bond market, the yield on the 30-year bond fell to 7.24% from 7.40% on Monday. Its price, which moves in the opposite direction, rose 1 21/32 points, or $16.56 per $1,000 in face value.

The long bond’s price had been down nearly 3 1/2 points in the last two sessions.

The bond market rally was viewed by most analysts as just a temporary detour from a long-term bearish trend, however.

Some analysts cited the Commerce Department’s Index of Leading Indicators, the government’s chief forecasting tool, which fell 0.1% in February.

The index, released Tuesday, showed its first decline in seven months.

Meanwhile, the dollar soared against most major currencies, powered by the stock and bond market rallies, which created a huge demand for dollars to buy U.S. securities.

Rising issues outnumbered declining ones about 7 to 1 on the New York Stock Exchange, where volume was a heavy 366.89 million shares, up from 344.39 million on Monday.

* Technology stocks, mostly concentrated in the smaller capitalization Nasdaq index, also helped to lead the market higher. Lotus Development added 5 5/8 to 72 and Newbridge Networks gained 4 3/4 to 56 5/8. Hutchinson Technology gained 4 1/2 to 35 1/4; Cisco Systems added 1 7/8 to finish at 35; Microsoft gained 3 1/4 to 87 3/4

* Car makers were big gainers on the NYSE, with General Motors rising 2 3/4 to 57 3/8 and Chrysler up 2 7/8 to 54 3/8.

* Caterpillar surged 4 to 117 1/4 and Deere & Co. rose 2 3/4 to 86 3/8.

* Airline stocks were also strong, with AMR Corp. up one at 57 1/2 and UAL Corp. gaining 2 1/2 to 127 3/8.

Small investors were buying some stocks, but gingerly, and only shares in well known companies that could do well in a rising economy or are expected to report stellar earnings for the first three months of the year.

“I guess investors have been trained to buy the dip. It’s almost mystical,” said Bob Doll, director of equity investments at Oppenheimer Co.

At the same time, some portfolio managers said they were making selective purchases or drawing up shopping lists for when the stock market stabilizes further. Some experts were not convinced the market had touched bottom Monday, however, as the Dow closed at a five-month low of 3,593.

Overseas markets closed generally higher. Tokyo’s 225-issue Nikkei average ended with a gain of 440.99 points, closing at 19,563.21. Share prices on the Frankfurt bourse closed with solid gains. The DAX-30 ended 25.18 points higher at 2,158.29. In London, the Financial Times 100 average closed with a gain of 29.8 points, at 3,116.3. Mexico’s Bolsa index fell 31.34 points to 2,234.15, amid nervousness over the murder of the ruling party’s presidential candidate.