Rally Drives Dow Up 10.82 to First Close Above 1,900
The stock market maintained its record-setting momentum Tuesday as late buying boosted the Dow Jones industrial average to its first close above 1,900.
Several broad market measures also hit new highs amid active trading.
Buying interest picked up in the afternoon and allowed the Dow Jones average of 30 industrials to break out of a tight trading range. The blue-chip barometer climbed 10.82 points past the previous closing peak reached Monday and finished the session at 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.
Volume on the Big Board swelled to 147.67 million shares from 135.13 million on Monday.
A report earlier Tuesday 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.
The lethargy might compel the Federal Reserve Board to stimulate growth by driving down interest rates, many analysts say. Speculation that the central bank would soon trim its discount rate, the interest that it charges on loans to financial institutions, has contributed to strength in the credit markets and on Wall Street.
Hopes that falling interest rates will eventually bring better business conditions and improvements in corporate profits have whetted investors’ appetites for stocks.
International Business Machines paced the improvements in the blue chips and closed up 2 1/8 at 148 5/8. Among other components of the Dow Jones industrial average, Union Carbide rose 1 7/8 to 23, Procter & Gamble gained 1 1/2 to 81 5/8, Merck moved up 1 1/8 to 105 5/8 and American Telephone & Telegraph was unchanged at 25 3/8.
Stocks involved in takeover and other news attracted investors.
One of the notable gainers was Midland-Ross, which jumped 6 7/8 to 28 1/2. The company said Tuesday that it had agreed to be acquired by Forstmann, Little & Co. for $28 a share, or $450 million.
Coca-Cola rose 7/8 to 42 3/4. The company on Tuesday announced an agreement to acquire its largest independent bottler, JTL Coca-Cola, for $1.4 billion in cash, less assumed debt, from owner John T. Lupton. Coca-Cola also said it will explore the possibility of creating a publicly owned bottling company.
Sanders Associates was unchanged at 53 3/4. Loral Corp. has raised its bid for 10 million Sanders shares to $50 apiece, up from a $44-a-share bid in cash and stock that Sanders rejected late last week.
Bell South topped the Big Board’s most-active list, and it lost to 62 1/2.
Southwestern Bell slid 7 to 102 1/2. The credit rating agency Standard & Poor’s said Tuesday that it has put Southwestern Bell’s senior debt under surveillance for possible downgrading. The move followed an announcement from Southwestern on Monday that it is buying Metromedia’s cellular telephone and paging operations for $1.65 billion.
More Block Trades
Large blocks of 10,000 or more shares traded on the NYSE totaled 2,788, compared to 2,464 on Monday.
In the daily tally on the Big Board, 865 issues rose in price, 654 declined and 435 were unchanged. The exchange’s composite index of all of its listed common stocks rose 0.72 to 144.68, surpassing Monday’s record close.
Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 175.15 million shares.
Standard & Poor’s index of 400 industrials rose 1.71 to 281.49, and S&P;’s 500-stock composite index was up 1.20 at 252.04, a record high.
Bond Prices Mixed
The bond market failed to respond strongly to the weak economic news that helped inspire the stock market to record highs. Bond prices ended mixed. The Treasury Department’s key 30-year bond rose about $2 for each $1,000 in face value, and its yield fell slightly from 7.23% to 7.22%. Some shorter-term issues fell in value and their yields rose.
Analysts said the bond market needs a cut in the discount rate before it can resume the rally of the past several months.
The market has been climbing on repeated speculation that slower economic growth will compel the Fed to cut the discount rate to 6% from 6.5%.
