Dow Utility Index Soars to Highest Level Since 1965
Stock prices staged a broad advance in active trading Friday, pushing several market indicators to record or near-record levels.
Electric, natural gas and telephone utility issues were among the day’s standout performers as the Dow Jones average of 15 utilities surpassed a peak that had stood for two decades.
Dow Jones’ average of 30 industrials climbed 7.29 to 1,285.34, finishing the week with a net rise of 11.16 points. That left the industrial average short of its record closing high of 1,299.36 reached on March 1 of this year.
By contrast, the Dow Jones utility average, with a 2.92 gain to 164.75, topped its previous closing high of 163.32 set on April 20, 1965.
Volume on the New York Stock Exchange stepped up to 124.63 million shares from 99.42 million Thursday.
Analysts said buying was encouraged by expectations of a reduction in the Federal Reserve’s discount rate.
Those hopes were fulfilled after the close when the Fed announced that it would lower the rate it charges on loans to private financial institutions to 7.5% from 8%, effective Monday.
Moments later, New York’s Citibank cut its prime lending rate to 10% from 10 1/2, matching a reduction posted earlier in the week by Bankers Trust of New York.
The Fed’s policy-setting Federal Open Market Committee is due to meet next Tuesday. An easing of credit policy, and any resulting decline in interest rates, would stand to revive economic growth after a period of sluggish statistics in recent months.
As large users of capital, and as popular candidates for the portfolios of income-conscious investors, utility stocks are often especially sensitive to changes in interest-rate expectations.
Among the electric companies on Friday’s list of 52-week highs, Consolidated Edison of New York rose 1 3/8 to 35, Boston Edison 3/8 to 40 3/8, Potomac Electric Power 1 to 32, Southern Indiana Gas & Electric 1 to 26 and Southern Co. 3/8 to 20 7/8.
In the regional telephone sector, Bell Atlantic gained 2 5/8 to 90 1/2, Nynex 2 to 87 3/8, Ameritech 2 to 89 7/8, Pacific Telesis 1 5/8 to 73 3/4 and Bell South 1 to 40 1/8.
Elsewhere in the market, drug, retailing and computer stocks also turned in strong showings.
International Business Machines helped pace the blue chips with a 1 3/4 rise to 130 3/4.
In the daily tally on the Big Board, more than five issues rose in price for every two that lost ground. The exchange’s composite index added 0.98 to 108.48, hitting a new high for the fifth time in the last six sessions.
