Market Moves Broadly Higher; Dow Gains 13
The stock market turned broadly upward Tuesday, regaining much of the ground lost in its previous session as traders shrugged off fluctuating interest rates and speculation over the future of oil prices.
The Dow Jones average of 30 industrials rose 13.05 to 1,789.87. On Monday, the blue-chip stock index fell 15.92 points as many traders cashed in gains made in the record advance of the previous week.
But stock prices rose for most of the session Tuesday, with the Dow briefly topping the 1,800 mark for the first time in late trading before settling back.
Volume on the New York Stock Exchange totaled 148.01 million shares, up from 137.46 million on Monday.
Although there was uncertainty over the potential impact of the Organization of Petroleum Exporting Countries meeting in Geneva, analysts said many Wall Streeters believed that the fundamental factors supporting the bull stock market--low interest rates and oil prices--will not change drastically in the near future.
Interest Rates Edge Lower
Interest rates in the bond markets fluctuated throughout the day over the OPEC developments before closing slightly lower. Interest rates were supported by the Commerce Department’s report of a smaller-than-expected 3.5% drop in new housing construction during February.
The anticipated anti-inflationary effects of low oil prices have helped push interest rates to eight-year lows in the credit markets.
“The point is that, even if OPEC does come to some agreement, you still have an inflation rate that’s close to zero, (and) you have every reason to believe that interest rates will come down again,” said Larry Wachtel, a stock analyst for Prudential-Bache Securities in New York. “There is incentive to enter the market.”
Oil company stocks were higher. Occidental Petroleum was up 1/2 to 25 5/8, Phillips Petroleum rose 1/8 to 10 3/8, Mobil rose 1/8 to 29 3/8 and Atlantic Richfield rose 1/2 to 53 1/2.
General Motors Climbs
General Motors rose 2 3/4 to 83 7/8 and topped the list of most actively traded NYSE issues as 1.96 million shares changed hands.
General Dynamics rose 4 1/2 to 84 in active trading, but the company said it knew of no reason for the rise.
Federal Express fell 3 3/8 to 66 in heavy trading. The company late Monday announced lower-than-expected third-quarter earnings.
Among other actively traded blue chips, IBM was up 1 1/2 to 152 3/8, U.S. Steel rose 3/8 to 23 3/4, Eastman Kodak rose 3/8 to 60, McDonald’s rose 2 3/4 to 95 3/8 and Exxon was down to 55 1/2.
Financial issues also were broadly higher, with Citicorp up 1 3/4 to 58 7/8, E. F. Hutton up 1 1/8 to 43 5/8 and BankAmerica up 5/8 to 17 3/8.
Gainers outpaced losers by about five to three on the New York Stock Exchange.
Large blocks of 10,000 or more shares traded on the NYSE totaled 2,825, compared to 2,369 on Monday.
Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 179.62 million shares.
Standard & Poor’s index of 400 industrials rose 1.48 to 260.39, and S&P;’s 500-stock composite index was up 1.11 to 235.78.
The Wilshire index of 5,000 equities closed at 2,420.868, up 12.830 from Monday.
The NYSE’s composite index rose 0.63 to 135.70.
At the American Stock Exchange, the market-value index rose 2.47 to 267.69.
The NASDAQ composite index for the over-the-counter market closed at 371.52, up 1.51.
Bond Market Mixed
The bond market finished mixed as the market reacted to a variety of news including the OPEC meeting in Geneva.
The slide in petroleum prices was one of the key forces behind the bond market rally this year because inexpensive oil would help hold down inflation.
Maury Harris, first vice president at Paine Webber, said traders discussed reports that Federal Reserve Board Chairman Paul A. Volcker found himself in the minority late last month when he voted against a cut in the discount rate, the interest rate on Fed loans to financial institutions.
“It certainly does raise questions about the extent of Volcker’s power. That’s bearish because he’s a popular fellow in the financial markets” due to his reputation as an inflation fighter, Harris said.
According to the Fed, four Reagan-appointed Fed governors outvoted Volcker at a meeting in late February. But Volcker persuaded the majority to defer the action, and, on March 6, the board unanimously approved a half-point reduction in the discount rate to 7%.
In the secondary market for Treasury bonds, short-term securities were up by 1/32 point and intermediate governments were unchanged to up 3/16 point. A key 20-year bond rose 21/32 point and the benchmark 30-year issue edged up 7/32 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, stood at 116.58, down 0.16 from Monday’s close. The Shearson Lehman composite government securities index, which makes a similar measurement, rose 2.70 to 1,222.98.
In corporate trading, industrials and utilities gained 1/8 point in quiet dealings.
Among tax-exempt municipal bonds, revenue bonds slid 1/2 point and general obligations lost 3/4 point in moderate trading volume.
