Falling Interest Rates Spur Stocks; Dow Up 4
The stock market recorded a broad gain Thursday, renewing its recent rally with a push from falling interest rates.
The Dow Jones average of 30 industrials rose 4.53 to 1,278.05, bringing its gain since May 1 to 36 points. Some other, broader market measures reached record highs for the third or fourth time in the past five sessions.
Volume on the New York Stock Exchange slowed to 99.42 million shares from 106.12 million on Wednesday.
On Wednesday, Bankers Trust of New York lowered its prime lending rate to 10% from 10 1/2%.
The market responded erratically to the news at first, partly because no other banks joined in the move. But analysts said the lower rate probably would soon spread in the banking industry.
Expectations persist on Wall Street that the Federal Reserve might soon relax its credit policy through actions such as a reduction of its discount rate--the charge it imposes on loans to private financial institutions.
The hope on Wall Street is that lower rates will stimulate a revival of economic growth, which has been sluggish lately.
Optimism on that score got a boost Thursday morning from the Commerce Department’s report that housing starts rose 1.6% in April to their highest level in a year.
Signal Cos. rose 1 to 40 1/2 and Allied picked up 1 to 41. The two companies plan a $5-billion merger.
Among other actively traded blue chips, International Business Machines gained 1/2 to 129, American Telephone & Telegraph 3/8 to 23 3/8 and Exxon 3/4 to 51 1/2.
Exxon said it will continue a stock repurchase program under which it has bought back more than 100 million of its shares since July, 1983.
Tokheim fell 3 to 17 5/8. The company, which manufactures equipment for gasoline stations, said it expects lower earnings for the current quarter and fiscal year. It cited mergers and restructuring strategies among some of the energy companies that are its largest customers.
Hewlett-Packard, which reported lower quarterly profits, dropped 1 1/8 to 32 7/8.
Bond prices retreated from their highs for the day late in the session after the Federal Reserve Board reported the nation’s basic money supply shot up $2.1 billion in early May. Most analysts had been expecting a decline.
