Market Treated to a Thanksgiving Rally : Dow Soars 18.92 to a New High as Volume on Big Board Swells to 143 Million Shares
The stock market staged another strong advance Wednesday, treating investors to a pre-Thanksgiving feast of record highs.
The Dow Jones average of 30 industrials climbed 18.92 to 1,475.69, topping the previous closing high of 1,464.33, which it reached last Friday.
Volume on the New York Stock Exchange picked up to 143.65 million shares from 123.05 million on Tuesday.
Analysts said there was nothing special in the news to account for the renewed strength of the market. They said it appeared to benefit from buying by traders who have been frustrated in their hopes for a pullback in stock prices to give them an opportunity to get in on the rally.
Another evident plus was a prominent story in the Wall Street Journal that discussed the bullish long-term forecasts of some analysts and money managers.
Light activity is expected for Friday’s post-holiday trading. But brokers, noting that stock prices have often risen in the past on the day after the Thanksgiving holiday, said that a general awareness of that historical pattern might have helped to encourage buying in Wednesday’s trading.
Big Day for Drug Stocks
Gainers of a point or more among the blue chip and technology issues included International Business Machines, up 1 at 140; Digital Equipment, up 3 5/8 at 122 1/8; Xerox, up 1 at 60, and International Paper, which was up 1 at 48.
Drug stocks, which have been climbing lately with the help of a declining dollar and high hopes for some new products in the industry, had another big day. Merck jumped 4 3/8 to 130 7/8; Upjohn rose 3 3/4 to 137 1/2; Pfizer climbed 1 5/8 to 53, and SmithKline Beckman gained 1 1/2 to 76 3/8.
Warner-Lambert gained 2 to 44. The company plans to sell its hospital equipment operations and to use the proceeds to repurchase about 8 million of its shares.
Texaco led the active list, down 5/8 at 31 1/2 on top of a 2 1/8-point drop Tuesday. The stock has been under pressure since a Texas jury held that the company must pay Pennzoil $10.53 billion for its actions in taking over Getty Oil. Texaco, which is appealing the ruling, has said it might have to file for protection under the bankruptcy laws as a last resort.
Securities industry stocks were broadly higher. Phibro-Salomon climbed 7/8 to 43 3/8, Paine Webber 1 1/2 to 35 and Merrill Lynch 1 to 33 1/2.
In the daily tally on the Big Board, nearly two issues rose in price for every one that declined.
In the credit markets, government bond prices scored gains as the market gave a good reception to the Treasury’s new notes.
Rumors that the Federal Reserve Board may reduce the discount rate reappeared, helping to push prices higher, analysts said. The discount rate is the interest rate that the Fed charges on loans to commercial banks and savings institutions. It has stood at 7.5% since May.
Corporate bond prices finished higher while municipal issues closed out the generally quiet pre-holiday session unchanged.
The Treasury sold $7.5 billion of new five-year, two-month notes at an average yield of 9.13%. It was the lowest average return since 7.94% on March 28, 1978, and was down from 9.62% at the last auction of five-year notes on Aug. 28.
The Treasury received $25.1 billion in bids for the notes.
Analysts have been encouraged by the bond market’s ability to advance in recent weeks despite the government’s massive borrowing operations. They say the market’s ability to absorb the recent flood of government debt has been tested as dealers cast about for buyers to purchase their bloated inventories of new Treasury issues.
Yields on the Treasury’s new benchmark 30-year bond, maturing in 2015, stood at 9.9% late Wednesday, down from 9.96% late Tuesday.
In the secondary market for Treasury securities, prices of short-term governments rose 3/32 point, intermediate maturities rose from 6/32 point to 11/32 point and prices of long-term government bonds were up between 15/32 point and 17/32 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 108.62 from Tuesday’s close. The Shearson Lehman daily Treasury bond index, which makes a similar measurement, went up 2.32 to 1,138.75.
In corporate trading, Salomon Bros. said industrials and utilities rose 1/2 point in light activity.
Among tax-exempt municipal bonds, the investment firm said revenue bonds and general obligations were unchanged in quiet trading.
Yields on three-month Treasury bills fell four basis points to 7.17%. Six-month bills declined two basis points to 7.27%, while one-year bills fell three basis points to 7.32%. A basis point is one-hundredth of a percentage point.
The federal funds rate--the interest on overnight loans between banks--traded at 8.5%, compared to 7.688% late Tuesday.
U.S. stock and commodity markets are closed today in observance of Thanksgiving Day. Banks, government offices and many businesses also will be closed. All markets will be open Friday.
