Oils, Transportations Pace Rally; Dow Up 12

The stock market greeted the fourth quarter with a strong rally in active trading Tuesday, lifting the Dow Jones industrials to their highest level in eight weeks.

Oil and transportation issues led the broad advance, which came in the heaviest trading since late July. Financial, drug and computer stocks also scored notable gains.

The Dow Jones average of 30 industrials jumped 12.32 to 1,340.95, its best level since standing at 1,346.89 on Aug. 5. The Dow Jones transportation average, fueled by gains among airline stocks, surged 13.11 to 653.68.

Gainers overall led losers by five to two on the New York Stock Exchange, whose composite index rose 1.58 to 106.77.

Volume Increases

Big Board volume swelled to 130.24 million shares from 103.62 million on Monday. It was Wall Street’s busiest day since 143.63 million shares changed hands July 23.

Analysts attributed the upswing to several factors. The government’s report Monday of a 0.7% August gain in its main gauge of future economic activity encouraged investors, as has the dollar’s recent slide in international foreign exchange, they said.

Wall Street also was encouraged that investors again demanded some of the market’s so-called leadership issues, such as International Business Machines, General Motors and the oil stocks, traders said. IBM rose 2 3/4 to 126 5/8 and GM was up 1 at 68.

Short-covering and buying programs launched by institutional investors also contributed to the market’s strong tone, especially near the closing bell, they said.

Finally, a flurry of takeover proposals and merger speculation also helped lead prices higher.

Oil stocks have rallied this week in response to recent increases in crude oil prices stemming from relatively low inventories and rising seasonal demand.

Exxon rose 1 1/8 to 53, Mobil gained 7/8 to 30, Chevron was up 1 3/4 to 38 3/4 and Amoco jumped 3 to 68 5/8.

Airline Stocks Bid Up

Investors disregarded the prospect of higher fuel costs and bid up airline stocks. Northwest Airlines, a rumored takeover target, led the group by climbing 3 to 51 3/8. AMR rose 1 to 40 1/2 and UAL was up 1 1/8 at 48 3/8.

Speculation that Revlon is considering a management buy-out as a new block to Pantry Pride’s hostile takeover attempt pushed Revlon shares up 3 7/8 to close at 50 3/8.

Richardson-Vicks rose 4 1/2 to 68 following a 10-point surge Monday. After the close, Richardson-Vicks, which has been fighting a takeover bid by Unilever, said it agreed to be acquired for $69 a share by Procter & Gamble, which fell 5/8 to 55 3/4.

Midcon soared 10 3/8 to 56 3/4 in heavy trading amid rumors that it, too, is a takeover target.

Beatrice gained 1 3/8 to 38 7/8 and topped the NYSE’s active list after announcing plans to divest four units, including Avis, the rental-car company that it acquired when it purchased Esmark last year.

CBS jumped 6 1/8 to 116 3/8 after Loews, up 1 1/8 to 44 1/2, said it raised its stake in CBS to 11.1% from 9.9%.