Dow Index Ends Day Above 1,900 for First Time : Blue-Chip Average Gains 10.82; Bond Prices Also Rise as Interest Rates Slip

The stock market maintained its record-setting momentum today as late buying boosted the blue chips and brought the Dow Jones industrial average to its first close above 1,900.

The Dow index climbed 10.82 points past Monday’s closing level to 1,903.54. Wall Street’s best-known indicator first closed above 1,800 on March 20, when it rose 16.29 points to 1,804.24.

Gains outpaced declines by 865 to 654 on the New York Stock Exchange.

Big Board volume totaled 147.67 million shares, against 135.13 million in the previous session.

The NYSE’s composite index rose 0.72 to 144.68. At the American Stock Exchange, the market value index was up 0.47 at 284.67.

Hopes that falling interest rates will eventually bring better business conditions and improvements in corporate profits have whetted investors’ appetites for stocks. The chances of lower rates have grown on account of the economy’s persistent weakness, many analysts contend.

Fed Seen Driving Down Rates

The lethargy might compel the Federal Reserve Board to stimulate growth by driving down interest rates, these analysts say. Speculation that the central bank would soon trim its discount rate, the interest that it charges on loans to financial institutions, has helped sustain a rally in the bond market and contributed to Wall Street’s strength.

The prospect of further yield reductions in the credit markets has also sent some investors into equities.

A report today on the government’s main gauge of future economic activity suggested continuing sluggishness. The Commerce Department’s index of leading indicators edged up 0.2% in May, substantially below the increases of the previous three months.

Some actively traded long-term Treasury bonds gained again in the credit markets, where a growing number of dealers have become convinced that the Federal Reserve Board must drive down interest rates.

Many of the economy’s vital signs have been weak this year and the belief has spread that the central bank will soon attempt to promote economic health by trimming its discount rate.

The discount rate, now at 6.5%, is the only interest rate that the Fed directly controls, and adjustments in it often influence credit costs throughout the economy.

In the early going in the secondary market for government securities, the price of the 30-year Treasury bond rose 5/16 point, which reduced the key bond’s yield to 7.21% from 7.23% late Monday.

In other secondary dealings, prices of short-term governments ranged from unchanged to up 1/32 point from Monday’s close while intermediate maturities held steady. The 20-year bond went up 3/16 point, according to the investment firm Salomon Bros.

At midday, the Merrill Lynch daily Treasury index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, stood at 117.79, up 0.19 from Monday. The Shearson Lehman daily Treasury bond index, which makes a similar measurement, rose 2.11 to 1,233.91.

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

Yields on three-month Treasury bills held at 5.97%.