Economic News Fuels Rally; Dow Gains 8.61
The stock market staged a broad advance in active trading Tuesday, helped by new signs of economic strength, a slide in open-market interest rates and an interruption of the dollar’s historic rally.
Nearly two stocks rose in price for every one that fell on the New York Stock Exchange. The NYSE’s composite index of all its listed stocks climbed 1 to 104.82.
The Dow Jones average of 30 industrials, up 1.66 points Monday, gained another 8.61 points to finish at 1,286.11.
But the blue-chip average finished below its high of the day. The stock market’s best-known indicator had been up more than 12 points with an hour of trading remaining.
Interest-rate-sensitive utility and financial companies were among the heavily traded issues.
American Telephone & Telegraph gained to 21 as the most active issue on the NYSE. Nearly 2 million shares changed hands.
Federal National Mortgage Assn. rose 3/8 to 17, Financial Corp. of America gained 1/8 to 9 and J. P. Morgan rose 1 to 45 5/8.
But Public Service Co. of Colorado fell to 19 1/8 and Ohio Edison was unchanged at 12 1/2.
Multinationals Gain
FPL Group, a utilities holding company, was unchanged at 21 in trading that included a block of 944,800 shares changing hands at 21 1/8 a share.
Meanwhile, a retreat by the dollar from record heights helped stocks of several multinational businesses, such as pharmaceutical companies.
Merck rose 1 to 100 1/2 and Upjohn gained 1 to 74 3/4.
International Business Machines, which has complained that sales abroad have been hurt by a strong dollar, climbed 5/8 to 134 1/2 after being down 5/8 in the early going when the dollar was still soaring.
IBM often is a market leader because of its prominence in the portfolios of such investing institutions as pension funds.
Other technology issues also gained ground, including Texas Instruments, up 2 1/2 at 112 1/8. On Monday, Texas Instruments tumbled 8 1/8 points after an analyst at a securities firm lowered his earnings estimates for the company.
Analysts also attributed Tuesday’s gains to a report issued after the close of trading Monday that short interest on the NYSE had increased to a record 249.4 million shares in the month ended Feb. 15. That represented the number of borrowed shares of stock that had been sold in anticipation of declining prices and not yet bought back to complete the transaction.
Dana Stewart, a technical analyst at Bear, Stearns & Co., said that, when traders who had been betting on a falling market saw there was “too much company on the disbelief side,” they bought stock to reduce their exposure to losses should the market rebound further.
Bonds Mostly Rise
Big Board volume rose to 114.15 million shares from 89.74 million Monday.
Large blocks of 10,000 or more shares traded on the NYSE totaled 2,157, compared to 1,787 on Monday.
In the credit markets, bond prices mostly rose, with municipal issues posting notable gains. Rates on short-term Treasury securities were mixed, however.
Yields on three-month Treasury bills fell 4 basis points to 8.35%. Six-month bills were unchanged at 8.52%, and one-year bills edged up 1 basis point to 8.67%. A basis point is one-hundredth of a percentage point.
In the secondary market for Treasury bonds, prices of short-term governments slipped 1/32 point, intermediate maturities rose 7/32 point and long-term issues climbed 12/32 point, according to the investment firm of Salomon Bros. Inc.
In corporate trading, industrials and utilities rose point in light trading.
