Market Rally Resumes; Dow Soars 18.12 to Hit Another Record Close
Stock prices soared today in active trading, as the stock market surged early and strengthened through the day in renewing its historic 1985 rally.
The Dow Jones average of 30 industrials rose 18.12, closing at 1,565.71, its first record high of 1986, surpassing the Dec. 16 record of 1,553.10, and other market measures followed the Dow to record territory.
Gainers outpaced losers by about 13 to 4 on the New York Stock Exchange.
Big Board volume totaled 152.95 million shares, against 99.61 million in the previous session, for the 23rd most active day in NYSE history.
Big Board Volume
The NYSE’s composite index rose 1.76 to 123.14.
At the American Stock Exchange, the market-value index was 2.52 higher at 249.89, topping the previous record close of 249.03 on July 26, 1983.
The rally followed a quiet, generally sluggish session on Monday, which marked the beginning of the first normal week for the stock market since the two weeks broken up by the Christmas and New Year’s holidays.
Analysts said stock prices were buoyed by a rally in the bond markets, which saw prices of 30-year Treasury bonds rise by about $12.50 for each $1,000 of face value.
In addition, other observers noted that although the market was generally lower on Monday, stock prices strengthened at the end of that session, giving many traders confidence that a prolonged downturn was not in the immediate future.
Bond prices turned higher in early trading, while some short-term interest rates slipped.
Prices of government issues had fallen in the previous session as the markets braced for a steady supply of new securities this week.
The Treasury is scheduled to sell $6.5 billion of new seven-year notes later today and $4.75 billion of new 20-year one-month bonds Wednesday.
Traders were also awaiting government figures on December unemployment, which will be released Wednesday.
In the secondary market for Treasury securities, prices of short-term governments rose 3/32 point from late Monday, intermediate maturities rose by between 6/32 point and 15/16 point and long-term issues were up 1/2 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, was unavailble. But the Shearson Lehman daily Treasury bond index, which makes a similar measurement, was up 3.01 at 1,166.94.
In corporate trading, industrials were up 1/2 point in light trading and utilities were up point.
Tax-Exempt Municipal Bonds
Among tax-exempt municipal bonds, revenue and general obligation bonds rose 3/4 point in active trading.
Yields on three-month Treasury bills were down 2 basis points to 7.03%. Six-month bills fell 2 basis points to 7.08% and one-year bills dipped 3 basis points to 7.09%. A basis point is one-hundredth of a percentage point.
Yields on 30-year Treasury bonds slipped to 9.27% from 9.30%.
