Market Stages Broad Advance; Dow Gains 8.17 : Reports of Movement on Budget Cuts Fuel Rally
Stock prices staged a broad advance Thursday as Wall Street anticipated the agreement by a conference committee in Congress on a budget proposal.
The Dow Jones average of 30 industrials rose 8.17 to 1,355.62, moving within hailing distance of the record closing high of 1,359.54 that it reached July 19.
Volume on the New York Stock Exchange came to 121.48 million shares, against 124.17 million Wednesday.
Brokers said investors were encouraged by signs that agreement was near on a plan to cut the federal budget deficit. News came late in the session that House and Senate conferees had settled their differences.
Airline Stocks Strong
The market also appeared to benefit from recent evidence that the economy is picking up some momentum after a sluggish showing in the first half of the year.
Airline stocks were strong, extending their recent rise on talk of further declines in oil prices. UAL gained 2 5/8 to 57 5/8, AMR 1 3/4 to 50, Delta 1 1/2 to 50 5/8, Eastern to 10 7/8 and Pan American 1/8 to 7.
Pan Am, on turnover of nearly 4 million shares, led the active list for the second straight day. The airline has been calling in a series of convertible bonds and that has created an “arbitrage situation,” which explains the active trading, said Louis A. Marckesano, an analyst with Janney Montgomery Scott in Philadelphia. “Arbitrageurs are playing the differential between the conversion value of the bonds and the market value of the stock,” he said.
In the energy sector, Chevron dropped 5/8 to 36 1/8, Atlantic Richfield 7/8 to 58, Exxon 1/2 to 52, Mobil 1/2 to 29 1/8 and Texaco 3/8 to 35 5/8.
Middle South Utilities was actively traded, down at 11 5/8. The stock took a 2 1/8-point tumble Wednesday after the company said state regulators had denied a request for a rate increase from its Louisiana Power & Light subsidiary.
ITT, also active, rose to 33 1/8. The company reported second-quarter earnings of 78 cents a share, up from 52 cents in the same period last year.
Manville jumped 1 1/8 to 7 on word that the company was near agreement on a plan to deal with asbestos claims and emerge from bankruptcy court protection.
Bond Prices Mixed
In the credit markets, prices finished mixed as prices pulled back in the wake of an afternoon report that the nation’s basic money supply jumped $3.7 billion in the latest week.
Bond prices, which had been higher earlier in the day, gave up most of those gains in the wake of the money supply report.
Meanwhile, the Treasury auctioned $8.8 billion in new 52-week bills at an average annual yield of 7.6%, the highest yield since 7.94% on May 14 and up from 7.09% at the previous 52-week bill auction July 9.
