Retail, Energy Issues Pace Market Rebound
The stock market put together a moderate rally Thursday as traders took a slightly more sanguine view of the outlook for interest rates.
Retail and energy stocks ranked among the leaders of the advance.
The Dow Jones average of 30 industrials, which had fallen more than 18 points in the two previous sessions, gained 10.91 to 1,786.21.
Volume on the New York Stock Exchange reached 136.03 million shares, against 129.89 million on Wednesday.
Many Wall Streeters began to conclude late Wednesday that the Treasury’s record-size sale of bonds and notes this week was going better than had been expected earlier. As a result, the belief spread that the financing, which wound up Thursday, could be completed without any significant upward move in interest rates. Worries about the Treasury auction were cited as a contributing factor in the stock market’s decline last week.
While the markets have been absorbing the new supply of government securities, brokers noted, they also have shown little disruption from the suddenly increased chances of a major tax-revision bill this year.
H&R; Block Hurt
A measure passed by the Senate Finance Committee early Wednesday would, among other things, eliminate favorable treatment for long-term capital gains and diminish incentives to invest in individual retirement accounts.
One stock hurt Thursday by the presumedly increased chances of tax simplification was H&R; Block, down 2 5/8 at 37 3/4.
Saga Corp. jumped 7 1/8 to 36 5/8. The company said it received an unsolicited $34-a-share takeover offer from Marriott Corp.
J. C. Penney gained 3 to 74 3/8 and F. W. Woolworth 2 5/8 to 77 5/8. The companies posted some of the better showings among what analysts described as generally sluggish sales gains for the nation’s large retailers in April.
In the energy sector, bolstered by the recent rebound in oil prices, Amoco rose 1 to 63, Texaco 1 1/8 to 32 7/8, Atlantic Richfield 1 to 57 1/8 and Chevron 1/2 to 39 7/8.
A group of five stocks that were added to Standard & Poor’s 500-stock composite index also enjoyed a good day, with Bausch & Lomb up 2 at 40 3/4, James River 1 at 46 5/8, Johnson Controls 1 at 46 5/8, Rubbermaid 2 1/2 at 46 and Thrifty Corp. 1 at 27 1/2.
The strength was attributed to buying by managers of index funds, which are set up to match the performance of the 500 by duplicating its composition. The newcomers replaced stocks in the process of being merged or taken private.
Large blocks of 10,000 or more shares traded on the NYSE totaled 2,651, compared to 2,398 on Wednesday.
In the daily tally on the Big Board, advancing issues outnumbered declines by about nine to five. The NYSE’s composite index gained 0.64 to 136.75.
Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 163.63 million shares.
Standard & Poor’s index of 400 industrials rose 1.44 to 265.04, and the S&P; 500 was up 1.05 at 237.13. The Wilshire index of 5,000 equities closed at 2,452.669, up 12.215.
The NASDAQ composite index for the over-the-counter market added 2.07 to 387.40.
At the American Stock Exchange, the market value index closed at 272.53, up 1.87.
Bond Prices Mixed
In the bond market, prices ended mixed after an indecisive session dominated by concerns over the government’s borrowing needs.
As trading wound down in New York, the Treasury reported results of the auction that concluded a $27-billion financing operation. The auction sold $9.02 billion in 30-year bonds at an average yield of 7.37%, down from 9.28% at the last auction on Feb. 5 and the lowest in about 11 years.
The Treasury received $19.10 billion in bids for the bonds.
The benchmark 30-year bond slid 1/2 point, or about $5 for each $1,000 in face amount. Its yield rose to 7.55% from 7.51% late Wednesday.
The Merrill Lynch daily Treasury index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, closed at 118.17, up 0.05 from Wednesday’s close. The Shearson Lehman daily Treasury bond index, which makes a similar measurement, dipped 1.89 to 1,235.52.
In corporate trading, industrials were unchanged in brisk trading and utilities fell 1/8 point light activity.
Among tax-exempt municipal bonds, general obligations gained point in quiet dealings and revenue bonds rose moderate trading.
Yields on three-month Treasury bills rose two basis points to 6.02%. Six-month bills were unchanged at 6.04%. One-year bills rose four basis points to 6.09%.
