Dow Leaps 29.74 to End Within 3 Points of Record : Weakening Oil Prices, Signs of Strengthening Economy Cited for Rally
Stock prices flirted with a new record high Tuesday, driven upward by weakening oil prices, a stronger bond market and expectations of both lower interest rates and a stronger economy in the second half of this year, analysts said.
The Dow Jones industrial average closed at 1,853.03, up 29.74 points from Friday, the last day of trading before the Memorial Day holiday weekend.
The record close of 1,855.90 was set April 21.
Advancing issues outpaced decliners on the New York Stock Exchange by nearly three to one.
Analysts said the performance, coming on top of last week’s overall gain of 63.49 points, indicates that the recent period of correction and consolidation is ending--or over. But there were also signs that investors were not completely convinced of this.
Oil Futures Prices Drop
Volume was a relatively quiet 121.16 million shares--marginally higher than last week’s average daily volume of 118.20 million shares but far less than the daily levels of at least 150 million shares commonly seen earlier this year.
Oil futures prices dropped on the New York Mercantile Exchange on Tuesday. Contracts for July delivery of West Texas Intermediate, the benchmark U.S. crude, fell 50 cents a 42-gallon barrel to $15.10 from the previous closing price.
In the bond market, the Treasury Department’s key 30-year bond rose about $6 for each $1,000 in face value, and its yield declined to 7.40% from 7.46% late Friday. Some long-term issues rose more in value.
Interest-rate-sensitive issues, such as savings and loans and banks, did well Tuesday, along with issues of companies that benefit from low inflation.
IBM closed up 3 1/8 at 147; Federal National Mortgage Assn., a stockholder-owned corporation chartered by Congress, was up 1 1/2 at 36; First Boston Corp. was up 1 at 58 7/8, and American Express was up 1 7/8 at 61 7/8.
International Paper was up 2 3/4 at 60 1/8 after reports of two favorable assesments by brokerage firms. Boise Cascade was up 2 3/8 at 58 5/8.
Among auto stocks, General Motors was up 1 1/8 at 78 3/8, Ford was up 1 1/8 at 79 1/8 and Chrysler rose 1/2 to 38.
Oils were mixed. Mobil was down at 31 1/2; Exxon was up 1/2 at 59 1/8. Kerr McGee was up 5/8 at 30.
Electronics also were mixed. Burroughs, which said it had made a $76.50-per-share merger offer to Sperry’s board, was down 3/8 at 59 1/2; Sperry was up 1 1/8 at 74. Data General was up 1 1/8 at 39 7/8.
Among drug issues, SmithKline Beckman was up 2 1/2 at 96, Eli Lilly rose 1 7/8 to 72, Warner Lambert gained 1 7/8 to 59 and Upjohn climbed 3 7/8 to 97 7/8.
