Stocks Surge in Busy Day; Dow Up 13.91 : Falling Interest Rates, Progress on Reducing Deficit Provide Boost
Falling interest rates and hopes for progress in shrinking the federal budget deficit touched off a strong advance in stock prices Friday, carrying some market indicators to record highs.
The Dow Jones average of 30 industrials climbed 13.91 to 1,274.18, stretching its gain for the week to 26.94 points.
Volume on the New York Stock Exchange reached a three-month high of 140.26 million shares, against 110.99 million Thursday.
The day’s gains left the Dow Jones industrial average short of its closing high of 1,299.36, reached March 1. But some other, broader yardsticks of stock-price trends surpassed the peaks they established last month.
Early Friday, the Senate narrowly approved a three-year package of $295 billion in spending cuts.
Stiff Opposition in House
The measure still must be acted upon in the House, where it is expected to face stiff opposition. But Wall Street analysts said it raised hopes among investors that the budget deficit problem could be dealt with.
In the credit markets, prices of long-term government bonds, which move in the opposite direction from interest rates, jumped more than $10 for every $1,000 in face value.
Brokers said stock and bond prices also were helped by relief that the Treasury’s $20.5-billion sale of bonds and notes this week had been completed with a reasonably good response.
Another apparent plus was the government’s report that the producer price index of finished goods rose 0.3% in April. Although the increase was a bit larger than the index has been showing in recent months, it came in at the low end of advance expectations on Wall Street.
Gainers of a point or more among the blue chips included International Business Machines, up 2 at 130 1/8; General Motors, up 1 at 68 7/8, and General Electric, up 1 1/8 at 60 1/2.
In the banking sector, which was very strong for the second straight session, Chase Manhattan added 2 1/8 to 57 3/8, J. P. Morgan 1 to 51, Manufacturers Hanover 1 1/8 to 40 1/8, Banc One 2 1/8 to 33, Bankers Trust New York 3 1/2 to 71 3/4 and Republic New York 1 to 49 3/8.
Trans World Airlines rose 3/4 to 17. Late Thursday, financier Carl C. Icahn said he had acquired a 20.5% stake in the company and was contemplating further moves toward gaining control of it.
In the minus column, Jack Eckerd Corp. fell 3 1/8 to 22 7/8 on word that the company expects to report a drop of about 50% in its earnings for the quarter ended April 27.
Advancing issues outnumbered declines by more than three to one on the Big Board. The exchange’s composite index jumped 1.33 to a new high of 106.64.
Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 162.51 million shares.
Standard & Poor’s index of 400 industrials rose 2.50 to 203.95, and S&P;’s 500-stock composite index was up 2.36 at a record 184.28.
The NASDAQ composite index for the over-the-counter market soared 4.19 to 287.46.
At the American Stock Exchange, the market-value index closed at 228.17, up 1.53.
The Wilshire index of 5,000 equities closed at 1,899.715, up 23.410.
Large blocks of 10,000 or more shares traded on the NYSE totaled 2,970, compared to 2,238 on Thursday.
Bond prices surged in moderately active trading.
Prices of 30-year Treasury bonds shot up about $13.75 for each $1,000 in face value. The long-term Treasury bond, auctioned Thursday at an average annual yield of 11.38%, had dropped to 11.20% by late Friday.
In the secondary market for Treasury bonds, prices of short-term governments rose 1/8 point to point, intermediate maturities were up 1/2 point to 1 point and long-term issues were up 1 3/8 points, according to the investment firm of Salomon Bros. The movement of a point is equivalent to a change of $10 in the price of a bond with a $1,000 face value.
In corporate trading, industrials and utilities rose 7/8 point.
Among tax-exempt municipal bonds, general obligations and revenue bonds were up 1/2 point.
Yields on three-month Treasury bills fell 1 basis point from Thursday to 7.74%. Six-month bills fell 3 basis points to 7.91%, and one-year bills were down 5 basis points at 8.06%.
