Dow Climbs 7.46 to Hit 1,892.72, a Record High

The stock market reached record highs Monday on the strength of buying that pushed the Dow Jones industrial average briefly past 1,900 for the second time.

Dow Jones’ average of 30 blue chips, up nearly 18 points at its afternoon high, closed with a 7.46 gain at 1,892.72.

That topped the previous closing peak of 1,885.90 reached June 6. Most other leading market indicators also set new highs.

With Monday’s session, the Dow Jones industrial average closed out the first half of 1986 showing a gain of 346.05 points, or 22.4%.

Volume on the New York Stock Exchange came to 135.13 million shares, up from 123.81 million on Friday.

Analysts said the market continued to benefit from the spreading belief that the Federal Reserve would soon reduce its discount rate.

That talk persisted Monday, sending prices higher and interest rates lower in the bond market. The price of the 30-year Treasury bond, up about 1 point or $10 for each $1,000 in face amount on Friday, rose another 9/16 point. The key bond’s yield declined to 7.23% from 7.28% late Friday.

But after the Dow hit 1,900, selling pressure quickly drove it back.

Analysts frequently argue that the importance of “psychological barriers” at round numbers like 1,900 is exaggerated. Nevertheless, it appeared that some traders were using 1,900 on the Dow as a reference point to cash in some of their gains.

Takeover Stocks Active

With the long July 4 weekend approaching, Wall Streeters expect activity to taper off before the trading week ends at Thursday’s close. But action in stocks involved in takeover news and speculation continued at a brisk pace on Monday.

Sanders Associates gained 3 to 53 3/4. Loral Corp. announced plans to offer $50 apiece for 10 million Sanders shares, raising the ante from a $44-a-share bid in cash and stock that Sanders rejected late last week.

Safeway Stores, which has been widely discussed as a possible takeover target, rose to 53 3/4.

Gainers among the blue chips included McDonald’s, up 1 7/8 at 73 1/8; Merck, up 1 1/8 at 104 1/2; Procter & Gamble, up 1 5/8 at 80 1/8, and American Telephone & Telegraph, up at 25 3/8. But International Business Machines slipped 1/2 to 146 1/2.

Kaufman & Broad picked up 3/4 to 25 1/2. The company reported earnings for the fiscal quarter ended May 31 of 58 cents a share, up from 34 cents in the comparable period last year.

In the daily tally on the Big Board, nearly two issues rose in price for every one that lost ground.

Large blocks of 10,000 or more shares traded on the NYSE totaled 2,464, compared to 2,603 on Friday.

Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 159.83 million shares.

Standard & Poor’s index of 400 industrials rose 1.18 to 279.78, and S&P;’s 500-stock composite index was up 1.24 at 250.84.

Interest Rates Edge Down

In the credit markets, bond markets rose modestly higher while interest rates declined amid the speculation that lackluster economic activity might induce the Fed to pursue more generous credit policies.

But bond market analysts said trading was fairly light Monday as dealers awaited clearer signals on the economy from reports due this week.

The Commerce Department issues its index of leading indicators, a gauge of future economic activity, on Tuesday, and the Labor Department releases its monthly unemployment report on Thursday.

Many analysts say the central bank might demonstrate its decision to relax its policy posture by cutting the discount rate, the interest charged on loans to financial institutions.

“Conditions are ripening for another move to lower interest rates, including a reduction in the Fed discount rate,” Albert M. Wojnilower, chief economist and a managing director of First Boston Corp., said in a weekly commentary.

Jay Goldinger with the investment banking firm Cantor, Fitzgerald & Co. is one analyst who thinks the Fed will stay on its current credit policy course.

“I’d be surprised if the Fed eased policy,” Goldinger said.

Meanwhile, Goldinger said trading in the credit markets will probably remain light as this week’s long holiday weekend approaches.

In the secondary market for Treasury bonds, prices of short-term governments rose by 1/16 point to point from Friday’s close and intermediate maturities rose by point to 3/8 point. The 20-year bond went up 5/8 point, according to the investment firm Salomon Bros.

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

In corporate trading, industrials rose 3/8 point and utilities were up 1/2 point in light dealings, Salomon Bros. said. The firm said that among tax-exempt municipal bonds, revenue bonds gained 1/2 point while general obligations were unchanged in moderate volume.