Market Surges in Late Rally; Dow Sets Record
The stock market’s best-known indicator and other Wall Street gauges surged to record highs Tuesday on the crest of a rally in the last half-hour that apparently was sparked by institutional buying.
Gainers outpaced losers 10 to 9--a record 17th consecutive session that advancers held the edge, reported Newton Zinder at E. F. Hutton & Co.
The Dow Jones average of 30 industrials spurted 14.79 points to 1,292.62. The previous high was 1,287.20 set on Nov. 29, 1983.
The NYSE’s composite index rose 0.90 to 103.43, surpassing the record close it reached Monday.
Standard & Poor’s index of 400 industrials rose 1.98 to 200.53, and S&P;’s 500-stock composite index was up 1.78 to 179.18, another record.
At the American Stock Exchange, the market-value index was 223.36, up 1.14.
The NASDAQ composite index for the over-the-counter market closed at 276.17, up 1.14.
Institutional Buying
Although profit-taking pressured prices during most of the session, buyers kept jumping in from the sidelines and prevented any meaningful decline, said Michael Metz, an analyst with Oppenheimer & Co.
“Then in the middle of the afternoon, you had a buy program from one of the institutional houses. Traders jumped aboard and everybody scampered. You had the compression of an enormous run in the last half-hour,” Metz said.
Zinder said: “There was nothing that we could pinpoint in terms of any specific news developments. We can only assume that the market refused to give some ground during the consolidation, and that attracted buyers. There was a rush to get on board.”
During the market’s broad advance of the past three weeks, the Dow Jones average has gained more than 100 points.
“Basically, it’s been a growing perception among investors that one, the economy was recovering from the slow period of late summer and fall, and that two, interest rates were not likely to move up during this recovery, and three, that inflation was going to stay very low,” Zinder said.
‘Second-Tier’ Issues
“That’s a wonderful combination for the stock market,” he added.
Metz cited individual investors returning to the market and buying “second-tier” issues.
“If he (the individual investor) really wants to return to the market in full force,” Metz said, “then we’d have a huge bull market.”
Asked if the OPEC meeting helped the rally, Zinder responded: “All that proves is that OPEC is in disarray. That confirmed what we’ve known for several months now.”
In Geneva, OPEC’s president said the cartel was near agreement on a price-cutting plan. The size of proposed price cuts was the main point of contention inside the closed-door meeting, Indonesian Oil Minister Subroto, OPEC’s president, told reporters.
Brokerage stocks moved up strongly during the record-setting session. Hutton was up 3 1/8 at 39, First Boston was up 2 7/8 at 63, Paine Webber was up 2 3/4 at 38 and Merrill Lynch was up 1 5/8 at 34 5/8.
The session’s volume leader was American Telephone & Telegraph, down at 21 1/8. The company reported Monday that earnings for its first year of operation after the breakup of the Bell System came to $1.25 a share.
Big Board volume totaled 115.73 million shares, against 128.41 million in the previous session.
Most bond prices rose in moderate trading, boosted by expectations of further cuts in oil prices.
Yields on 30-year Treasury bonds fell closer to 11%, a level last seen in mid-1983, dropping to 11.11% from 11.21% late Monday.
The federal funds rate, the interest on overnight loans between banks, traded at 8.25%, down from 8.688% late Monday. The federal funds rate began falling after the Federal Reserve Board added reserves to the banking system by arranging the temporary purchase of government securities.
In the secondary market for Treasury bonds, prices of short-term governments rose 1/8 point to 3/8 point, intermediate maturities were up 3/8 point to 1/2 point and long-term issues rose 5/8 point to 7/8 point.
In corporate trading, industrials and utilities rose 1/2 point. But among tax-exempt municipal bonds, general obligations fell 1/2 point and revenue bonds were down 1/8 point.
Short-term interest rates were mixed.
Yields on three-month Treasury bills rose 6 basis points to 7.79%. A basis point is one-hundredth of a percentage point. Six-month bills fell 1 basis point to 7.98%, and one-year bills were up 1 basis point at 8.24%.
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