GM Advance Fuels Strong Market Rally : Space Disaster Briefly Stalls Revival; Dow Index Climbs 18.81
Stock prices jumped Tuesday in a powerful rally paced by blue chip leader General Motors after stalling briefly because of the space shuttle Challenger’s disastrous explosion.
Traders said Wall Street reacted to lower energy prices and a strong showing in the bond market, where expectations are growing that interest rates will decline and give the economy a boost.
The Dow Jones average of 30 industrials rose 18.81 points to close at 1,556.42. It was the Dow’s biggest one-day surge since Dec. 13, when the stock market’s best-known indicator advanced 23.97 points, and marked its second-highest closing in history. On Jan. 7, the Dow Jones industrials closed at a record high of 1,565.71.
Traders said the market shook off a noontime pause that was a reaction to the Challenger tragedy. Such catastrophic events can sometimes have a depressing effect on Wall Street.
Minute of Silence
“It did throw a rag on the market, but nothing permanent,” said John J. Smith of Fahnestock & Co., a Wall Street investment firm.
The New York and American stock exchanges said they would observe a minute of silence today at 11 a.m. EST in remembrance of the ill-fated spacecraft’s seven-member crew.
Stocks of all four big shuttle contractors fell. Morton Thiokol was the biggest loser, down 4 3/8 to 32 1/2. Rockwell fell 7/8 to 34 3/8, Martin Marietta fell 1 1/8 to 33 1/2 and Lockheed dropped 1 to 45 3/4.
Peter J. DaPuzzo, manager of the retail equities unit at Shearson Lehman Bros., said the market’s quick recovery reflected a strong underlying strength in stock prices.
“The market has ignored the tragedy,” he said. “If the market were nervous or skittish, this could have caused a major sell-off.”
Gainers outran losers by nearly a two-to-one margin on the New York Stock Exchange, where volume totaled 146.22 million shares.
Large blocks of 10,000 or more shares traded on the NYSE totaled 2,796, compared to 2,566 on Monday.
The Big Board’s composite index of all its listed common stocks closed at 121.10, up 1.23. Among other indicators, the American Stock Exchange’s market-value index closed at 243.95, off 0.22. The NASDAQ composite index for the over-the-counter market closed at a record 332.64, up 2.44. The previous high of 329.74 was set Jan. 7. The Wilshire index of 5,000 equities closed at 2,165.474, up 20.582.
The day’s biggest benefactor was GM, up 3 3/8 to 74 in what analysts called a reaction to lower oil prices and the bright outlook for interest rates, which could encourage consumer spending. They also linked a strong showing in auto maker stocks to reports that Japan may impose new voluntary restraints on car exports to the United States. Ford was up 2 1/8 to 62 5/8 and Chrysler rose 1 3/4 to 46 1/8.
Wall Street’s optimism boosted a wide range of stocks in manufacturing, transportation, utility and retail industries as well as financial companies, which stand to benefit from any ease in credit conditions.
Among the most prominent gainers, Ameritech rose 3 to 107 1/8, IBM rose 2 1/8 to 151 3/4, Bell Atlantic climbed 2 to 106, Merrill Lynch advanced 2 1/8 to 40 and Travelers rose 2 1/8 to 49 7/8.
Oil Stocks Decline
Oil stocks declined broadly, reflecting the industry’s difficulties caused by the recent plunge in oil prices. The biggest loser was Atlantic Richfield, down 1 1/8 to 53.
In the secondary market for Treasury bonds, prices of short-term governments rose 6/32 point, intermediate maturities rose between point and 1/2 point and long-term issues rose 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 and utilities rose 5/8 point in moderate activity.
Yields on three-month Treasury bills fell 4 basis points to 6.92%. Six-month bills fell 6 basis points to 7.02% and one-year bills were off 4 basis points at 7.08%.
