Dow Gains 4 in Late Rebound, Hits New High

The stock market edged upward Thursday, bouncing back from some early selling to post record highs for the second straight session.

The gains were spotty and small by comparison to those chalked up in the last few trading days. But some analysts considered them impressive nevertheless, coming as they did against the background of an extremely weak bond market.

The Dow Jones average of 30 industrials, down more than 10 points at midday, closed with a 4.07 gain at 1,882.35.

Volume on the New York Stock Exchange came to 135.67 million shares, down from 159.59 million Wednesday.

Prices declined at the outset as sellers cashed in on the gains of the previous four trading days, during which the Dow Jones industrial average soared more than 103 points.

Bond Prices Plunge

The catalyst for that selling was a rise in interest rates prompted by some stronger-than-expected economic news. The Commerce Department reported that its index of leading economic indicators jumped 1.5% in April for its largest increase in nearly three years.

Bond prices took a steep drop and stayed down through the afternoon. The 30-year Treasury bond fell more than 2 1/2 points, or $25 for each $1,000 in face value, and its yield rose to 7.70% from 7.48% late Wednesday. The decline followed a 1-point drop in the benchmark issue during Wednesday’s session.

But in the last hour of trading, stocks reversed course and headed higher. Analysts said stock traders apparently decided to shrug off the interest-rate implications of the economic data and to concentrate instead on the prospects the report raised for improved business activity and corporate profits in the second half of the year.

Wall Streeters will be watching closely in the days ahead to see if this uncoupling of the stock and bond markets persists. If it does, many observers say, it would suggest that the bull market in stocks can continue even if the decline in interest rates is over.