Dow Average Rises 12 to Close Above 1,500 for the First Time Ever

The stock market ran up another gain today, carrying the Dow Jones industrial average to its first close ever above 1,500.

The Dow Jones average of 30 industrials climbed 12.50 to 1,511.70, extending its gain since Sept. 17 to 213.54 points.

Advances outpaced declines by nearly two to one on the New York Stock Exchange.

Big Board volume totaled 178.47 million shares, the fifth largest total on record, against 156.50 million in the previous session.

The NYSE’s composite index gained 1.08 to a new high of 118.80.

At the American Stock Exchange, the market-value index was up 0.52 at 241.16.

Analysts said the market benefited from a continuing drop in open-market interest rates. Prices of long-term government bonds, which move in the opposite direction from interest rates, rose $10 for $15 for every $1,000 in face value.

In recent days, investors also have been cheered by falling oil prices, which are seen as a plus for the inflation outlook and for many businesses that use large amounts of petroleum products.

Legal Setback for Texaco

The market’s gains came in spite of the jolt of a new legal setback for Texaco Inc. Late Tuesday a judge in Houston upheld a jury’s previous decision ordering Texaco to pay Pennzoil Co. more than $11 billion for its actions in wresting control of Getty Oil from Pennzoil.

In the credit markets, the yield on a benchmark 30-year Treasury bond dropped to 9.59% in the early going, down from 9.67% late Tuesday. Rates on shorter maturities also declined.

An announcement late Tuesday that Congressional negotiators had reached formal agreement on legislation designed to shrink the deficit gradually and wipe it out by 1991 lifted investors’ spirits, driving bond prices higher.

Curbing the budget deficit would cut down on government borrowing and pave the way for lower interest rates, analysts said.

The credit market also has been optimistic about inflation. Low inflation could enhance the chances for the Federal Reserve Board to relax credit conditions in an effort to revive economic activity, analysts said.

Optimism on Inflation

The optimism on inflation stems from the theory that energy costs could go down in response to the policy shift by Organization of Petroleum Exporting Countries.

In the secondary market for Treasury securities, prices of short-term governments rose between 3/32 point and 3/16 point, intermediate maturities rose between 7/32 point and 5/8 point and long-term issues were up about 3/4 point, according to the investment firm of Salomon Bros.

The movement of a point is equivalent to a change of $10 in the price of a bond with a $1,000 face value.

In corporate trading, industrials rose 3/8 in moderate activity and utilities were up 1/2 point in light dealings.

Among tax-exempt municipal bonds, revenue bonds moved up point in active and general obligations rose point in moderate activity.

Yields on three-month Treasury bills dipped two basis points to 7.17% in the first hours of trading. A basis point is one-hundredth of a percentage point.

The federal funds rate, the interest on reserves banks loan one another overnight, traded at 8.062%.