Interest Rate Hopes Boost Stock Market : Dow Industrials Closes Up 9.50, Just Below Record High in Heavy Trading

The stock market pushed ahead today, but fell just short of a record closing high in the Dow Jones industrial average.

The Dow Jones average of 30 industrials rose 9.50 to 1,885.05, its highest level since it reached a peak of 1,885.90 on June 6.

Advancing issues outnumbered declines by about five to three on the New York Stock Exchange.

Big Board volume totaled 161.79 million shares, against 140.62 million in the previous session.

The NYSE’s composite index gained 1.02 to a new high of 142.74. The American Stock Exchange market-value index, which hit a record high Tuesday, was up 0.79 at 285.19.

Analysts said the market continued to benefit from hopes for lower interest rates.

Recent signs of sluggish economic growth have prompted widespread forecasts on Wall Street that the Federal Reserve will take new steps to relax its credit policy.

Specifically, many economists are looking for a reduction soon in the Fed’s discount rate, the rate it charges on loans to private financial institutions.

Open-market interest rates declined Tuesday, but turned mixed in today’s activity. After the bond market lost some of its vitality, stock prices pulled back from their highest levels of the day.

In the secondary market for Treasury bonds, prices of short-term governments rose by point from Tuesday’s close, intermediate maturities were up by 1/2 point and long-term issues were up by as much as 1/2 point, according to Telerate, the financial information network.

The movement of a point is equivalent to a change of $10 in the price of a bond with a $1,000 face value.

The Merrill Lynch daily Treasury index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, rose 0.47 to 117.46 from Tuesday’s close. The Shearson Lehman daily Treasury bond index, which makes a similar measurement, rose 4.27 to 1,231.04.

In corporate trading, Telerate said industrials were up 7/8 point and utilities were up 1 3/8 point.

Quotes on tax-exempt municipal dollar and general obligation bonds were unavailable.

Yields on three-month Treasury bills were off 1 basis point at 6.21%, according to Telerate. A basis point is one-hundredth of a percentage point. It said yields on six-month bills fell 2 basis points to 6.31%.