Market Sweeps Ahead, Carries Dow to Record
The stock market swept ahead Friday, carrying the Dow Jones industrial average to a new high amid hopes for lower oil prices and interest rates.
The Dow Jones average of 30 industrials jumped 15.94 to 1,390.25, extending its gain for the week to 33.73 points. The average’s previous closing high had been 1,375.57 on Wednesday.
Volume on the New York Stock Exchange came to 129.36 million shares, up from 121.53 million on Thursday.
Analysts attributed buying to news accounts of a television interview Thursday in which the oil minister of the United Arab Emirates said the pricing structure and production quotas of the Organization of Petroleum Exporting Countries had virtually collapsed.
That was taken as a sign that the alliance of oil producers might be unraveling.
Mixed Blessing
Some observers were skeptical that his remarks were a reliable signal that OPEC’s problems had reached a critical stage.
If OPEC should fall apart, most analysts agree, it would be a mixed blessing. But it would stand to benefit overall economic growth in the U.S. economy and strike another blow against inflation.
The OPEC news overshadowed some early uncertainty over the interest-rate outlook. Late Thursday, the Federal Reserve reported an $8.5-billion jump in the basic measure of the money supply for the week ended Oct. 21.
That larger-than-expected increase gave some pause to traders who have been hoping for some new easing of the Fed’s monetary policy.
However, Paul A. Volcker, the Fed’s chairman, indicated early this week that the central bank isn’t very worried that recent rapid growth of the money supply will rekindle inflation.
Airlines Move Up
For several others reasons, including a continuing slump in the manufacturing sector of the economy, many analysts believe that a move to loosen credit by the Fed is still a strong possibility.
Shares of leading airlines, which are large consumers of fuel, moved up. AMR gained 1 to 39 7/8, Delta 1 1/8 to 38 and UAL 5/8 to 48 3/8.
Energy stocks, by contrast, were mostly lower. Amoco dropped 1/2 to 67 and Mobil lost 3/8 to 31 3/8. An exception was Exxon, up 1/2 at 55 1/2. Exxon raised its dividend this week.
Among the biggest contributors to the Dow Jones industrial average’s gain were General Electric, up 2 3/8 at 60, and McDonald’s, a recent addition to the Dow roster, which gained 2 to 69.
CBS Inc. rose 4 3/4 to 123. The company has been the subject of renewed takeover speculation recently.
In the overall tally on the Big Board, advancing issues outnumbered declines by nearly two to one.
In the bond market, prices finished slightly higher after shrugging off indications of improved employment and higher interest rates, but the market momentum that was visible earlier in the week slackened.
In the secondary market for Treasury bonds, prices of short-term governments were unchanged, intermediate maturities rose 1/32 point and long-term issues were up about 11/32 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 0.10 to 107.21. The Shearson Lehman daily Treasury bond index, which makes a similar measurement, rose 3.28 to 1126.10.
In corporate trading, industrials and utilities rose 1/8 point in light trading.
Among tax-exempt municipal bonds, general obligation and revenue bonds rose about 1/2 point. Trading was moderate.
Yields on three-month Treasury bills were up 2 basis points to 7.20%. Six-month bills rose 2 basis points to 7.29%, while one-year bills were up 1 basis point at 7.36%. A basis point is one-hundredth of a percentage point.
Yields on 30-year Treasury bonds fell to 10.22% from 10.26% late Thursday.
The federal funds rate--the interest on overnight loans between banks--traded at 7.75%, down from 8.625% late Thursday.
