Market Continues to Sizzle; Dow Rises 23.97 to Close Record Week

The stock market rushed onward without a pause Friday, driving the Dow Jones industrial average up 23.97 points to another record high and closing out what was the busiest trading week in the history of the New York Stock Exchange.

Amid growing expectations of yet another fall in interest rates, the market set records in four of the week’s five trading days and lifted the Dow to its biggest weekly advance of the year.

The closely watched index closed at 1,535.21 on New York Stock Exchange trading of 177.9 million shares, the sixth highest volume ever. The Big Board’s weekly trading volume was 827.4 million shares, topping the previous record of 754.6 million shares set during the week ended Aug. 10, 1984.

“The 1,600 mark is very much in sight,” said Lawrence Weisz, partner in the Chicago brokerage of Freehling & Co. “With all the publicity it’s been getting, the market’s beginning to feed on itself.”

Cut in Discount Rate Seen

Also contributing was new conjecture that the Federal Reserve Board might be ready to drop the discount rate--the rate that it charges member banks and on which the banks base their own interest rates. Some analysts theorize that the drop in oil prices and congressional passage of the Gramm-Rudman deficit reduction measure have convinced the Fed that it can drop rates without fear of accelerating inflation.

Traders speculate, too, that portfolio managers who want to be heavily invested in the market before year-end have given up waiting for a correction and have joined in the buying binge.

Meanwhile, the Fed reported that industrial production rose 0.4% in November, fueling hopes for a pickup in economic growth in the months ahead.

For the week, the Dow rose 58.04 points, or 3.97%. The point gain surpassed a 48-point weekly rise--to 1,276--that was posted in the week ended Jan. 25.

The NYSE’s composite index rose 1.71 to 120.83, while the American Stock Exchange’s market value index rose 3.00 to 244.78, setting a 52-week high.

Standard and Poor’s 500 stock index, a broader gauge of market activity, rose 3.21 to 209.94 for the day and 6.95 points for the week--marking its best weekly advance of the year.

The NASDAQ composite index for the over-the-counter market jumped 3.41 to 323.99.

The Wilshire index of 5,000 equities closed at 2,153.084, up 29.695.

Trading volume on the Pacific Stock Exchange set a daily and a weekly record, with 9.84 million shares Friday and 40.63 million shares in the week.

Large blocks of 10,000 or more shares traded on the NYSE totaled 3,645, compared to 3,397 on Thursday.

One of the most heavily traded stocks was Union Carbide, which rose 2 3/4 to 69 3/4 on talk that the chemical company, facing a takeover threat by GAF Corp., might be preparing for a management leveraged buy-out proposal at $84 a share. The stock’s trading volume was the second largest of the day at 2.28 million shares.

GAF stock rose 3 to 65 on speculation that a desperate Union Carbide might make a counteroffer for the smaller chemical company.

Traders said the computer stocks were driven up by a rumor that Honeywell would announce a leveraged buy-out. The company denied the rumor, but its stock rose 10 to 83 1/2.

A separate rumor named Ford Motor as the possible buyer. Ford stock rose 1 to 57 1/2, but a company spokesman would neither confirm nor deny Ford’s interest in Honeywell.

IBM edged up 1 3/4 to 150, Burroughs 3 to 66 and NCR 1 1/8 to 41 1/8.

Wang Labs Class B stock rose 1 3/8 to 22 1/2 on trading of 1.3 million shares, and Amdahl rose 3/4 to 14 on volume of 236,000.

“The interest kind of spilled over from Honeywell to the others,” said Martin Krounder, head of equity block trading at L. F. Rothschild, Unterberg Towbin.

A variety of other industry groups, ranging from auto and bank issues to drug and oil stocks, turned in strong showings. But the most notable gains were recorded in the tobacco group, with R. J. Reynolds Industries up 3 7/8 to 32 and Philip Morris up 4 7/8 to 85.

A federal judge in Knoxville, Tenn., dismissed a liability suit against Reynolds filed by an individual who claimed that cigarette smoking had caused his health problems. Analysts have been watching the case, and another still pending in Santa Barbara, to see whether the tobacco industry might face an onslaught of liability claims.

In the bank group, Citicorp gained 1 1/8 to 49 3/8, Chase Manhattan 1 5/8 to 69 1/8 and Manufacturers Hanover 1 to 45 1/8.

On the downside, E. F. Hutton fell 3/4 to 35 1/2. The company said it expects to post a loss for the fourth quarter.

MGM/UA Entertainment declined 3/4, closing at 23 3/4 on the unusually high volume of 1.1 million shares. The company said the trading apparently was affected by an “unfounded rumor” that talks had collapsed between Turner Broadcasting and Viacom on joint ownership of MGM/UA assets after the pending sale of the studio to Turner Broadcasting.

Bond Markets Quiet

The Associated Press reported that bond prices finished with minor changes and interest rates hovered near recent levels.

The credit markets remained preoccupied with what monetary policy course the Federal Reserve Board may pursue in the weeks ahead. The Fed’s policy-making arm, the Federal Open Market Committee, will meet next week to review its position.

The yield on a benchmark 30-year Treasury bond stood at 9.53%, compared to 9.55% late Thursday.

In the secondary market for Treasury securities, prices of short-term governments were unchanged to down 1/32 point, intermediate maturities ranged from down 1/32 point to up 5/32 point and long-term issues rose 1/16 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.

The Merrill Lynch daily Treasury index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, edged up 0.32 to 110.40. The Shearson Lehman daily Treasury bond index, which makes a similar measurement, rose 1.53 to 1,158.57.

In corporate trading, industrials were unchanged in light trading and utilities rose 1/8 point in light dealings.

Among tax-exempt municipal bonds, revenue bonds went up point and general obligations rose 3/8 point. Activity was moderate.

Yields on three-month Treasury bills edged up one basis point to 7.02%.