Dow Index Rises 12.50 to Close Above 1,500 for the First Time Ever

Only a month after it galloped past the 1,400 barrier, Wall Street’s runaway bull market sped by another milestone Wednesday as the Dow Jones industrial average gained 12.50 points to close above 1,500 for the first time.

The index of 30 of the largest corporate stocks closed at 1,511.70, with a broad range of stocks posting gains in the fifth busiest session on record at the New York Stock Exchange. The surge came just five weeks after the Dow first breached the 1,400 barrier on Nov. 6.

Wednesday’s gain means that, since the Aug. 12, 1982, start of the current bull market, the most widely watched index of the stock market has jumped 734.86 points, or nearly 96%.

OPEC Announcement

Big Board volume totaled 178.47 million shares, up from 156.50 million on Tuesday.

The torrid market climb gained momentum from Monday’s announcement by the Organization of Petroleum Exporting Countries that it plans to change its strategy and lower oil prices to maintain market share rather than preserve high prices by holding down production.

The market reacted favorably to that development, experts say, because lower oil prices improve the prospects that interest rates will drop and that inflation will slow even further.

“Lower oil prices are basically like a tax cut for the world,” said Jon Groveman, head of equity trading at Ladenburg Thalmann in New York. “It’s very bullish for the economy” since oil prices influence the cost of a wide range of goods from airline fares and record albums to gasoline and courier services.

“Ultimately, lower oil prices mean real interest rates will go down,” Groveman said.

The trend has already manifested itself in the continuing drop in open-market interest rates. The prices of long-term government bonds, which move in the opposite direction from interest rates, on Wednesday were up an additional $10 to $15 for every $1,000 in face value.

As a result, stocks sensitive to interest rates, such as banking and financial issues, did particularly well. Chase Manhattan gained 1 1/8 to 67 1/8, Great Western Financial 1 3/8 to 33 3/8 and J. P. Morgan 3 1/8 to 64. Morgan raised its quarterly dividend from 55 cents to 61.25 cents per share.

Airline Issues Climb

Meanwhile, airline issues thrived on expectations of lower fuel prices. Delta rose 1 to 40 1/2 and UAL 3/4 to 53.

Also pushing up the market, experts say, was the fact that more investment money was chasing fewer stocks.

Since 1983, according to Michael J. Hines, equity funds product manager for Fidelity Funds in Boston, about $146 billion in public stock has been taken off the market as companies have been bought out or taken private. Meanwhile, mutual funds flush with cash from individual retirement accounts and money from small investors eager to reap profits from the current bull market are helping to push up stock prices by increasing demand for stocks.

“There’s a shortage of stock in the sense that it’s very difficult to buy a large position,” said Ben Niedermeyer, senior vice president of Janus Capital Fund in Denver. “There seems to be a lot of cash flowing into mutual funds and yet no one wants to sell the market. You hate to say the market’s peaked because it keeps going up and up.”

Nevertheless, some analysts, including Niedermeyer, think the market is overdue for a correction.

Indexes Climb

Until recent weeks, skepticism about the market was more widespread as experts waited for the record-setting performance of the Dow index to be matched by other market indexes. But now those other market measures hover at or near record levels for the year.

The New York Stock Exchange’s composite index, for example, added 1.08 to 118.80 on Wednesday, an all-time high. Standard & Poor’s index of 400 industrials rose 1.89 to 228.75, and S&P;’s 500-stock composite index was up 1.92 at 206.31. The Wilshire index of 5,000 equities closed at 2,116.675, up 18.038.

The NASDAQ composite index for the over-the-counter market gained 1.57 to a 1985 record 318.86. At the American Stock Exchange, the market value index closed at 241.16, up 0.52.

Large blocks of 10,000 or more shares traded on the NYSE totaled 3,742, compared to 3,164 on Tuesday.

Texaco, which is a component of the Dow Jones industrial average, fell 2 1/2 to 28 on volume of more than 8.4 million shares. Pennzoil shares climbed 2 5/8 to 68 7/8.