Dow Climbs 4.81 to Record 1,337.70 : Stock Market Responds to Drops in Dollar and Oil Prices
A late round of buying carried the stock market to new highs Thursday as Wall Street responded to declines in the dollar and oil prices.
The Dow Jones average of 30 industrials gained 4.81 to 1,337.70, surpassing the peak of 1,337.14 that it reached July 1.
Volume on the New York Stock Exchange stepped up to 122.79 million shares, the largest total in nearly three weeks, from 108.81 million Wednesday.
Analysts said the market benefited from the dollar’s drop this week to its lowest levels since last August in foreign exchange trading.
A high value of the dollar against leading foreign currencies has made it difficult for U.S. manufacturers to compete with imports in the American market and to sell their goods at attractive prices overseas.
If it continues, brokers said, a falling dollar would stand to enhance the reported profits of many U.S.-based multinational companies.
Mexico Oil-Price Cut
However, they also pointed out, investors will still be confronted in the next couple of weeks with earnings reports for the second quarter that may be less than impressive in many cases.
Another plus for stocks was a cut in Mexico’s oil prices, coming at a time when nations that make up the Organization of Petroleum Exporting Countries are struggling to find ways to counter downward pressures on world oil prices.
Energy stocks were mostly lower, while airlines, which are big consumers of fuel, moved up.
Among the oil companies, Exxon lost 1/2 to 52 5/8, Mobil 5/8 to 29 5/8, Chevron 1/2 to 37 1/2, Amoco 3/8 to 63 1/2 and Atlantic Richfield 1 1/8 to 58 1/8. In the airline group, UAL gained 1/2 to 55 1/2, Delta Air Lines 3/4 to 51 and AMR 3/8 to 48 1/2.
Levi Strauss was the biggest percentage gainer among NYSE issues, up 8 1/2 at 45 1/2. The company said it was looking into a possible leveraged buy-out at $50 a share.
Coca-Cola climbed 2 3/8 to 74 3/4. The company announced Wednesday that it was bringing back the old formula for its flagship soft drink under the name Coca-Cola Classic while continuing to sell a new version of Coke introduced a few months ago.
CNA Financial led the active list, up 7/8 at 56 3/4. A 4.6-million-share block of the stock traded at 55 7/8.
Thursday’s tally on the Big Board showed about three issues advancing for every two that declined.
The exchange’s composite index, up 0.35 at 111.95, reached a new high.
Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 146.62 million shares.
Large blocks of 10,000 or more shares traded on the NYSE totaled 2,393 compared to 2,139 on Wednesday.
The Wilshire index of 5,000 equities closed at 1,994.105, up 6.774.
Standard & Poor’s index of 400 industrials rose 0.53 to 212.23, and S&P;’s 500-stock composite index was up 0.57 at 192.94.
The NASDAQ composite index for the over-the-counter market jumped 2.01 to 300.52.
At the American Stock Exchange, the market-value index closed at 233.21, up 0.62.
In the credit markets, bond prices plummeted and money-market rates rose sharply as the Federal Reserve dampened hopes for further substantial declines in interest rates.
During late trading, the central bank announced that the nation’s basic money supply swelled by $4 billion in the week ended July 1--an increase about double what credit analysts had expected.
The money supply already was expanding at a faster rate than the Fed has targeted. Hence, the latest big increase fueled speculation that the Fed, worried that excessive money growth will spur higher inflation, would not try to push interest rates lower anytime soon.
“This certainly precludes any immediate easing of monetary policy,” said Elliott Platt, an economist at the investment firm Donaldson, Lufkin & Jenrette Securities.
Some analysts have suggested, however, that the Fed still might push for lower interest rates if the economy remains sluggish.
Minutes Not Available
The Federal Open Market Committee, the central bank’s policy-making board, met privately Tuesday and Wednesday to chart a course on credit strategy. The minutes of those meetings will not be made available for several weeks, although traders will be watching the Fed closely in the meantime for signs of any policy changes.
In the secondary market for Treasury bonds, prices of short-term governments fell 12/32 point, intermediate maturities skidded 15/32 point and long-term issues tumbled 14/32 point, 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.
The Merrill Lynch daily Treasury index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, dropped 0.72 to 106.56.
The Shearson Lehman daily Treasury bond index, which makes a similar measurement, plunged 8.62 to 1,117.12.
Shearson Lehman said it was the worst one-day decline since it started the index on Jan. 1, 1984.
In corporate trading, industrials and utilities lost a full point in light trading.
Among tax-exempt municipal bonds, general obligations fell point and revenue bonds were off 3/8 point. Trading was light to moderate.
Meanwhile, yields on three-month Treasury bills jumped 15 basis points to 7.12%. Six-month bills climbed 15 basis points to 7.23%, and one-year bills rose 17 basis points to 7.35%.
A basis point is one-hundredth of a percentage point.
Yields on 30-year Treasury bonds rose to 10.45% from 10.32% late Wednesday.
The federal funds rate, the interest on overnight loans between banks, traded at 7.875%, compared to 7.688 on Wednesday.
