Stocks soared to their best gain in three months Monday after the dollar tumbled against other major currencies in worldwide foreign exchange.
The dollar’s slide--its worst one-day loss since being devalued in 1973--was triggered by the announcement Sunday that the United States, Britain, West Germany, France and Japan would jointly try to lower the dollar’s value.
However, most of the New York Stock Exchange’s gain came in opening trading. Brokers expressed disappointment that, once the initial buying flurry was over, prices showed little movement and the pace of trading tapered off.
The Dow Jones average of 30 industrials, up 17 points in the opening 30 minutes, finished with a 18.37-point gain at 1,316.31--its best showing since climbing 24.75 points June 21.
Gainers led losers by about two to one on the New York Stock Exchange, whose composite index rose 1.12 to 106.51.
The market’s reluctance to build on its early surge Monday showed that Wall Street remains skeptical about the various efforts to reduce the dollar’s value and bolster the U.S. trade position, brokers said.
“It didn’t take economists or market participants long to start raising questions and developing a ‘show-me’ attitude,” said Alfed E. Goldman, vice president of A. G. Edwards & Sons in St. Louis.
Eldom A. Grimm, senior vice president of Birr, Wilson & Co., said “there also is a big short interest in this market and some of this is short covering"--that is, traders buying back shares that they previously borrowed and sold in the hope that prices would fall.
Regardless, the dollar’s steep decline in the market particularly boosted prices of multinational stocks, many of which are components of the Dow Jones industrial average.
International Business Machines rose 1 3/8 to 128 1/8, Digital Equipment jumped 2 1/2 to 111 3/8, Dow Chemical was up 1 at 36, Pfizer spurted 2 to 47 and Westinghouse gained 7/8 to 38 7/8.
Other multinational issues gaining a point or more included Ford Motor, F. W. Woolworth and Upjohn.
Mining stocks advanced after the dollar’s drop helped gold prices rise about $10 an ounce. ASA rose 1 5/8 to 38 1/2, Homestake Mining moved up 3/4 to 25 5/8 and Campbell Red Lake gained 1 to 23.
SmithKline Beckman rose 1 5/8 to 65 1/8 after announcing that its board approved the repurchase of up to 5 million of the company’s shares.
American Telephone & Telegraph was unchanged at 21 1/2 and topped the NYSE’s active list. Trading included a 2.09-million-share block at 21 5/8 and a 1.42- million-share block at 21 3/8.
Peabody International edged up 1/8 to 10 5/8 after a 1.66-million-share-block crossed at 10 1/2.
Big Board volume totaled 104.79 million shares, against 101.39 million on Friday.
Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 124.60 million shares.
Large blocks of 10,000 or more shares traded on the NYSE totaled 2,036, compared to 2,025 on Friday.
Standard & Poor’s index of 400 industrials rose 2.72 to 205.52, and S&P;'s 500-stock composite index was up 2.25 at 184.30.
Overall, investors bid up the market value of stocks by $19.5 billion, or 1.04%, to $1.89 trillion based on Wilshire Associates’ index of 5,000 NYSE, American Stock Exchange and over-the-counter issues.
At the Amex, the market-value index rose 1.27 to 224.37.
The NASDAQ composite index for the over-the-counter market closed at 286.09, up 1.74.
In the credit markets, short-term interest rates fell but longer-term rates moved higher.
In secondary trading, yields on three-month Treasury bills fell 7 basis points to 6.93%. Six-month bills were off 7 basis points at 7.18%, while one-year bills were off 7 basis points at 7.41%. A basis point is one-hundredth of a percentage point.
In the secondary market for Treasury bonds, prices of short-term governments rose 1/8 point, while intermediate maturities were mixed, with shorter-term maturities up point but longer-term issues down point, according to the investment firm of Salomon Bros.
Yields on 30-year Treasury bonds rose to 10.62% from 10.57% late Friday.
In corporate trading, industrials and utilities fell 1/2 point in light trading. Among tax-exempt municipal bonds, general obligations fell 1/2 point in light trading and revenue bonds were off 1/2 point in active trading.
The federal funds rate, the interest on overnight loans between banks, traded at 7.875%, unchanged from late Friday.