Dow Soars 21 as Stocks Surge in Late Trading
Stock prices surged late in active trading Tuesday as the falling dollar and the rocketing price of gold sparked interest in buying, analysts said.
The market’s best-known indicator put in its best one-day performance in two months.
The Dow Jones average of 30 industrials jumped 21.42 points to 1,271.09 for its best single-day gain since a 34.01-point jump Jan. 21.
Volume on the New York Stock Exchange totaled 119.17 million shares, against 94.02 million on Monday.
Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 140.52 million shares.
Gainers outpaced losers by two to one on the New York Stock Exchange.
The market’s advance was “a flipping up” in an oversold market, said Larry Wachtel of Prudential-Bache Securities Inc.
Robert Stovall of Dean Witter Reynolds Inc. said: “The market was due for a rally.”
Blue Chips Lead Way
Stovall said losers outpaced gainers among Big Board issues in 17 out of the last 22 business days, “meaning the market has been giving up a great deal of its gains.”
“And we had that sinking spell last Friday,” when the Dow Jones average lost almost 13 points, he said.
Blue chips led the way Tuesday because the falling dollar raised hopes that multinational companies would suffer fewer currency losses, Wachtel said.
“The blue chips that got clobbered over the last few weeks are raising their heads here,” he said.
The falling dollar sparked buying in commodities, which helped gold and metals stocks. Gold was also pushed up by concerns about the U.S. banking system, analysts said.
Speculation that the dollar was about to retreat after a record-breaking spree last month added to the currency’s decline.
Strengthening in the bond market also helped stock prices, Wachtel said. Investors saw the prospect of lower interest rates in a report from Washington that housing construction fell 11% in February.
Broadcast Issues Rise
That decline led investors to believe that the Federal Reserve Board wouldn’t tighten its grip on the money supply, Wachtel said.
Among the blue chips, IBM was up 2 1/8 at 130 1/2, 3M rose 2 to 84 1/8 and Merck was up 1 at 101.
Broadcast issues were up for a second day on enthusiasm about the proposed $3.5-billion merger between ABC and Capital Cities Communications, which was announced Monday.
The federal funds rate, the interest on overnight loans between banks, traded at 8.688%, up from 8.563% late Monday.
Bond prices also turned higher in quiet trading, helped in part by an announcement of government borrowing plans that were lower than some estimates.
Yields on 30-year Treasury bonds slipped to 11.88% from 11.93% late Monday.
In the secondary market for Treasury bonds, prices of short-term governments rose 2/32 point, intermediate maturities rose 1/8 point to 3/8 point and long-term issues were up point to 1/2 point, according to the investment firm of Salomon Bros. Inc.
