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Stocks Gain in Seesaw Session; Dow Rises 8.86

From Times Wire Services

The stock and bond markets closed out a session of wide swings with moderate gains Wednesday.

Analysts said hopes for further declines in interest rates encouraged stock investors. But an upswing in oil prices kept the celebration from going very far.

The Dow Jones average of 30 industrials rose 8.86 to 1,778.62, bringing its gain over the past two sessions to 43.11 points.

Volume on the New York Stock Exchange reached 156.25 million shares, up from 146.29 million Tuesday.

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Discount Rate Cut

Analysts said the stock market benefited from reports that the United States was working toward a possible new round of discount rate reductions among leading industrialized countries.

Belgium’s central bank cut its discount rate Wednesday. And a Japanese newspaper said the Bank of Japan has tentatively decided to lower its rate by half a percentage point to 3.5%.

However, brokers said the stock market’s advance was disrupted at times by the volatile fluctuations of the oil market.

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Oil prices fell Tuesday, helping to spark a broad rally in stocks. But on Wednesday they turned upward again.

Another drag on the market was a weak showing by International Business Machines amid uncertainty over prospects for the company’s first-quarter earnings, which are expected to be reported Friday. IBM shares dropped 2 3/4 to 149.

IBM’s showing typified a session in which many blue-chip stocks responded sharply to widely varying news developments.

Tobacco stocks surged upward after an appeals court in Philadelphia ruled that the health warning printed on cigarette packs shields manufacturers from product liability claims based on alleged inadequacy of warning.

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Philip Morris, a component of the Dow Jones industrial average, jumped 9 to 124, R. J. Reynolds Industries gained 3 3/8 to 44 1/8 and American Brands was up 4 5/8 at 80 3/4.

Johnson & Johnson gained 2 3/4 to 58 3/8. The company announced plans to sell its diagnostic imaging business to General Electric and to buy back as many as 10 million shares of its stock in the open market.

F. W. Woolworth added 2 5/8 to 77. The company declared a 2-for-1 stock split and an increase in the cash dividend.

J. P. Morgan, which reported higher earnings for the first quarter, picked up 2 5/8 to 78 5/8.

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Elsewhere, Grumman was up 3/8 at 28 5/8. On Tuesday, the company received a $1.1-billion contract to provide delivery vehicles to the Postal Service.

In the daily tally on the Big Board, advancing issues outnumbered declines by nearly three to two.

Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 188.68 million shares.

Standard & Poor’s index of 400 industrials rose 0.22 to 258.44, and S&P;'s 500-stock composite index was up 0.23 at 233.75.

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Bond Prices Higher

In the bond market, corporate and municipal bond prices moved generally higher.

The discussion of the Federal Reserve Board’s possibly joining foreign central banks in interest rate reductions dominated the credit markets.

Interest rates on three-month Treasury bills fell 11 basis points to 6.02%. Six-month bills slid 10 basis points to 6.02%. One-year bills dropped nine basis points to 5.99%.

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The price of the bellwether 30-year Treasury bond gained nearly 3/4 point, or $7.50 for each $1,000 in face amount. Its yield fell to 7.33% from 7.38% late Tuesday. In Tuesday’s explosive rally, the key bond surged about $30 for each $1,000 in face amount.

In the secondary market for U.S. Treasury securities, prices of short-term governments rose by 5/32 point to point and intermediate maturities rose by 9/32 point to 5/16 point. The 20-year bond spurted 9/16 point, according to the investment firm of Salomon Bros.


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