Dow Just Misses 1,500, Climbs 2 to New High
Stock prices edged higher in active trading Tuesday as the Dow Jones industrial average made another unsuccessful run to crack the 1,500 level and optimism continued over lower interest rates and inflation.
The Dow Jones average of 30 industrial stocks rose 2.18 to close at 1,499.20. The close topped the record 1,497.02 reached Monday, setting a new high for the 33rd time this year.
But the average failed to close over the 1,500 mark that it had flirted with for the second straight trading session. The blue chip index rode a roller coaster throughout the day, rising over the 1,500 level in opening trading before retreating. It then staged a series of narrow advances and declines straddling the 1,500 mark and rising as high as 1,514 before ending just under 1,500 at the close.
As on Monday, the market was spurred by expectations of lower inflation stemming from dropping oil prices and by the bond market rally, which pushed interest rates lower in response to progress by Congress on legislation to balance the federal budget.
Psychological Barrier
Monte Gordon, a vice president and director of research for Dreyfus Corp., said 1,500 on the Dow remained a psychological barrier because the stock market had “used a lot of money to get there,” and many investors might view the strength of the recent rally with trepidation.
“They’re still out there a lot on expectations,” Gordon said. “You still have some uncertainties that come along. You’re bound to look over your shoulder and say ‘here I am’ and feel a little uncomfortable.”
Ray DeVoe, of Legg Mason Wood Walker Inc., said he believed that, as long as interest rates remained subdued or lower, the market would continue rising.
“The 1,500 level shouldn’t be any more difficult to break than 1,492,” DeVoe said.
Oil stocks staged a broad decline for the second straight day, with oil company issues accounting for eight of the 15 most heavily traded issues on the New York Stock Exchange.
The oil stocks retreated as crude oil prices slipped to close to five-year lows on the commodity markets in response to Monday’s announcement by the Organization of Petroleum Exporting Countries that it would direct its attention toward keeping its share of the world oil market rather than simply propping up oil prices.
Exxon led the list of most active stocks, falling 2 to 49 7/8 as more than 3.6 million shares changed hands. Phillips Petroleum fell 7/8 to 11, Atlantic Richfield 2 to 60 3/4, Mobil 7/8 to 29, Texas Oil & Gas 3/4 to 14 1/2 and Amoco fell 2 7/8 to 60 1/2. Also, Kerr-McGee was down 1 1/2 to 30 3/4, Occidental Petroleum fell 1 1/8 to 31 1/8 and Chevron fell 2 to 34.
Texaco closed unchanged at 30 3/4 after heavy trading. The company announced that it had adopted a “poison pill” stockholder rights plan to ward off hostile takeover attempts.
Union Carbide fell 2 to 64 3/8 and GAF rose 2 1/2 to 60 1/8.
Other advancing issues included RCA, up 3 5/8 to 53 1/8 in heavy trading; IBM, up 2 to 146 5/8; Disney, up 3 5/8 to 107 3/8, and Digital Equipment, up 2 3/4 to 130 3/8.
Among declining issues, Upjohn fell 2 1/2 to 129, Du Pont fell 1 3/4 to 63 1/2 and SmithKline Beckman fell 1 1/8 to 75 3/4.
Gaining issues outpaced losers by about nine to eight on the New York Stock Exchange.
Big Board volume totaled 156.5 million shares, against 144.01 million on Monday.
The NYSE’s composite index rose 0.10 to 117.72, breaking its previous record close of 117.70 set Dec. 4.
Large blocks of 10,000 or more shares traded on the NYSE totaled 3,164, compared to 2,758 on Monday.
Standard & Poor’s index of 400 industrials fell 0.16 to 226.86, and S&P;’s 500-stock composite index was up 0.14 to 204.39.
In the credit markets, government and corporate bond prices rose and interest rates descended further as hopes persisted for imminent passage of legislation to reduce the budget deficit.
The yield on a benchmark 30-year Treasury bond stood at 9.67% late in the session, down from 9.81% on Monday. Shorter maturities posted more moderate declines.
