Dow Index Rises 11.20 for Best Day in 5 Weeks
The stock market broke out of its summer doldrums Tuesday with a broad advance, and the Dow Jones industrial average scored its best gain in five weeks.
Trading volume picked up by about a third from Monday’s very slow pace.
The Dow Jones average of 30 industrials jumped 11.20 to 1,323.70, its best daily gain since rising 12.43 points July 16. The Dow Jones transportation average spurted 8.54 to 679.54.
Gainers overall led losers by about three to two on the New York Stock Exchange.
Big Board volume swelled to 91.23 million shares from 67.93 million on Monday.
Impact of ‘Buy Programs’
The upturn reflected technical and, to a lesser extent, economic developments, analysts said. They were reluctant to conclude that the gain indicated a major increase in bullish sentiment on Wall Street.
Among the technical factors, the market’s blue chips moved sharply ahead after two or three “buy programs” related to stock-index options were executed by brokerage houses, traders said. The firms apparently were buying some of the stocks that compose the indexes and selling the options in order to profit from their price differences.
Stocks also appeared to draw some support from the Commerce Department’s report that the economy, as measured by the gross national product, expanded at an annual rate of 2% in the second quarter, said Ralph Bloch, vice president of Moseley, Hallgarten, Estabrook & Weeden in Chicago.
But Alan C. Poole, market strategist at Laidlaw, Adams & Peck, said he saw little effect from the report and viewed the market’s advance as “a purely technical rally, perhaps abetted by the buying programs.”
Among the blue chips, International Business Machines climbed 1 5/8 to 127 1/2, U.S. Steel gained 3/4 to 30 and Chevron rose 5/8 to 37 1/2.
Technology issues also were standout gainers, including Burroughs, up 2 to 64; Data General, up 1 5/8 to 37, and Digital Equipment, up 1 3/8 to 101.
Revlon rose 3/8 to 46 and topped the NYSE’s active list. Revlon is fighting a takeover offer from Pantry Pride, which lost to 7.
Trans World Airlines rose to 22 1/2 after its board declined to take any of the steps that Texas Air Corp. had sought to support its battle with financier Carl C. Icahn for control of TWA. Texas Air was unchanged at 19 on the American Stock Exchange.
K mart tumbled 1 1/8 to 32 5/8, and Federated Department Stores lost 3/8 to 57. The retailers reported lower earnings for their fiscal second quarters.
Williams Cos. surged 2 3/4 to 32; the company said it couldn’t account for the rise.
Large blocks of 10,000 or more shares traded on the NYSE totaled 1,892, compared to 1,207 on Monday.
In bond markets, prices reversed course at midday and finished higher for the day as the federal funds rate continued to slip. That rate, the interest charged on overnight loans between banks, was 7.563%, down from 7.75% late Monday. It has been above 8% for most of the previous week.
Treasury Issues Gain
In the secondary market for Treasury bonds, prices of short-term governments rose 2/32 point, intermediate maturities rose 3/8 point and long-term issues were up 14/32 point, according to the investment firm of Salomon Bros. The Merrill Lynch daily Treasury index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, rose 0.20 to 106.43 from Monday’s close. The Shearson Lehman daily Treasury bond index, which makes a similar measurement, rose 0.81 to 1,116.32.
In corporate trading, industrials and utilities were up 1/8 point in light trading, Salomon Bros. said. But among tax-exempt municipal bonds, general obligations and revenue bonds were off point in moderate activity.
