Stocks Climb to Record High; Dow Rises 15.50
The stock market climbed to a record high Monday, benefiting from the latest cuts in the Federal Reserve’s discount rate and the bank prime lending rate.
The Dow Jones average of 30 industrials climbed 15.50 to 1,855.90, surpassing the record high of 1,855.03 reached last Thursday.
Volume on the New York Stock Exchange slowed to 136.09 million shares from 153.64 million Friday.
After the close Friday, the Federal Reserve lowered its discount rate to 6.5% from 7%. A good many banks across the country followed that move Monday by lowering their prime lending rates to 8 1/2% from 9%.
Analysts said that came as welcome news on Wall Street, but the positive response to it was a bit slow in developing. Stock prices were mixed through most of the morning.
Brokers said there was a feeling that the Fed’s action had been widely anticipated and perhaps was already reflected in the Dow industrial average’s rise of more than 101 points over the past two weeks. In addition, some observers maintained that the discount rate must be reduced at least another half a percentage point to stimulate any substantial pickup in economic growth.
Nevertheless, after its early hesitancy, the stock market came on strong near the close, while bonds were turning in a generally neutral showing in the credit markets.
Travel Stocks Gain
Bank stocks posted broad gains. Citicorp rose 1 to 62 3/4, Chase Manhattan 1 1/8 to 49 1/8, Barnett Banks of Florida 1 1/8 to 56 3/8, First Wisconsin 2 to 55 3/4, United Jersey Banks 1 5/8 to 42 3/8 and Chemical New York 1 1/8 to 55 1/8.
As they had done last week, traders also bid up stocks of companies that might benefit from changing travel plans out of fear of terrorism. Walt Disney Co. rose 2 5/8 to 49 3/8, Club Med 2 3/8 to 31 5/8, Hilton Hotels 3 7/8 to 77 7/8 and Marriott 5 to 166.
Among actively traded blue chips, IBM gained 2 to 154 7/8, General Motors 3/4 to 82, AT&T; 1/2 to 25 and Eastman Kodak 3/8 to 59 1/8.
Upbeat first-quarter earnings reports helped such pharmaceutical issues as Squibb, up 5 1/2 at 104, and SmithKline Beckman, up 2 7/8 at 98 3/4.
Government bond prices finished mostly lower after a session dominated by concerns about the direction interest rates will take following the Federal Reserve Board’s reduction in its chief loan charge.
The bond market was undermined by a strengthening in oil prices. Dealers were also reluctant to trade heavily ahead of government reports due today on inflation and durable-goods orders.
Corporate and municipal issues were mixed.
The federal funds rate traded at 7%, compared to 6.75% on Friday.