Blue Chips Rejoin the Market Rally : Auto, Airlines Issues Pace Gainers in Heavy Trading; Dow Up 9.49

Blue-chip issues rejoined the stock market’s rally in heavy trading Thursday as the Dow Jones industrial average closed just short of a record high.

Broader market gauges did reach new peaks, including the composite indexes of the New York Stock Exchange and Standard & Poor’s Corp.

Auto and airline stocks, rebounding from sharp losses in the previous session, paced the gainers. Steel, aerospace, computer and financial stocks also rose, but several retail issues fell.

The Dow Jones average of 30 industrials, up nearly 11 points at mid-session, closed with a 9.49-point gain at 1,290.08--exactly offsetting its loss over the two previous sessions. The advance left the average less than 3 points shy of its record high of 1,292.62 reached Jan. 29.

Advances led declines two to one on the NYSE, whose 65-stock composite index rose 0.78 to a record 105.18.

Big Board volume swelled to 151.73 million shares from 140.98 million Wednesday.

Temporary Setback

Earlier this week the general market, bolstered in part by investors’ enthusiasm about economic growth this year, extended Wall Street’s rally even though the Dow Jones industrial average began to struggle.

The inability of the average to make further progress was considered temporary by some brokers, however, and was attributed mainly to investors cashing in on the market’s big January gains.

Even though the blue chips resumed their upswing Thursday, Wall Street was encouraged that the overall market did not falter in tandem with the Dow Jones industrials.

Newton D. Zinder, senior vice president of E. F. Hutton & Co., wrote in his daily commentary that, in the past, “secondary and speculative stock strength relative to the blue-chip sector has been a bullish indication, not a bearish one.”

“It is when the top-tier stocks are moving ahead and the broad market is lagging that we usually have to be concerned,” he said.

Phillips Petroleum, target of a takeover bid by financier Carl Icahn, topped the NYSE’s active list and rose to 50, the price at which a 2.1-million-share block traded.

Among the blue chips, International Business Machines climbed 1 3/4 to 137 1/8, American Telephone & Telegraph was up 1/2 at 21 1/2 and General Motors rose 1 3/8 to 80 1/8.

Retail stocks fell after several big merchandisers posted disappointing January sales.

Associated Dry Goods lost 1/2 to 57 1/8, J. C. Penney fell 3/4 to 48 1/2 and Federated Department Stores was off 1/2 to 55 3/4. Industry leader Sears, Roebuck, however, rose 5/8 to 35 3/8 despite reporting a meager 1.5% sales gain.

Computer Issues Rise

K mart, meanwhile, slumped 2 1/2 to 37 after it said fiscal fourth-quarter profit would trail expectations.

In the computer sector, Digital Equipment rose 2 1/8 to 125, Control Data climbed 1 5/8 to 38 5/8 and Prime Computer rose 1 to 18 1/2.

Aetna Life fell 7/8 to 41 1/8 after a 2-million-share block crossed at 41. CIGNA dropped 1 5/8 to 47; a 1.82-million-share block traded at 47 3/8.

Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 181.02 million shares.

Standard & Poor’s index of 400 industrials rose 1.32 to 203.29, and S&P;’s 500-stock composite index was up 1.39 to 181.82--both record highs.

At the American Stock Ex change, the market-value index jumped 2.51 to 231.21.

Yields on 30-year Treasury bonds in the secondary market rose to 11.45% from 11.34% late Wednesday.

The federal funds rate, the interest on overnight loans between banks, traded at 8.438%, up from 8.188% late Wednesday.

In the secondary market for Treasury bonds, prices of short-term governments fell 2/32 point, intermediate maturities lost 7/32 point and long-term issues tumbled 30/32 point, according to the investment firm of Salomon Bros. Inc.

In corporate trading, industrials and utilities fell 1/2 point in moderate trading.