Stock Market Rebounds Near Close of Session; Dow Industrials Climb 5.76
The stock market came on strong at the close today, rebounding from an early drop.
The Dow Jones average of 30 industrials, down almost 20 points at its mid-session low, was up 5.76 at 1,831.83 by the close.
Advancing issues outnumbered declines by about eight to seven on the New York Stock Exchange.
Big Board volume totaled 146.16 million shares, against 142.88 million on Wednesday. The NYSE’s composite index rose 0.13 to 135.68.
The trading day began amid much talk of an impending reduction in the Federal Reserve’s discount rate.
It is widely believed that the Fed will act soon to lower its rate on loans to private financial institutions in an effort to stimulate a sluggish economy.
Nevertheless, observers said, the market was still feeling the aftershocks of the selloff that sent the Dow Jones industrial average into an 80-point slide on Monday and Tuesday.
Reports by Technical Analysts
That drop was touched off partly by reports from technical analysts who voiced concern that stocks were vulnerable to a drop after their dramatic advance over the past four years.
Bond prices and interest rates made minor movements early today as the credit markets marked time waiting to see whether the Federal Reserve Board acts to drive down interest rates.
The 30-year Treasury bond edged up 1/8 point from late Wednesday, which left the yield on the closely watched bond at 7.13%, compared to 7.14% late in the previous session.
Spirits in the credit markets have been lifted recently by predictions that the central bank would soon cut its discount rate as part of an effort to bolster credit in the banking system, thereby spurring economic activity.
The bellwether loan fee now is 6.5% and some private forecasters have said the Fed might announce a half-point, or possibly a full-point, reduction on Friday.
A lower discount rate, which is the interest that the central bank charges on loans to banks and savings institutions, might prolong this year’s downward pattern in interest rates, analysts have said. The credit market welcomes falling rates because they coincide with rising bond values.
Most Treasury Issues Up
In the secondary market for Treasury bonds, prices of short-term and intermediate-term governments were unchanged to up 1/16 point while the 20-year bond rose 3/8 point, according to the investment firm of 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.
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 118.09, up 0.16 from Wednesday’s close. The Shearson Lehman daily Treasury bond index, which makes a similar measurement, moved up 1.50 to 1,235.99.
In corporate trading, industrials rose 3/8 point and utilities were unchanged in quiet dealings. Among tax-exempt municipal bonds, general obligations gained 3/8 point while revenue bonds held steady.
Yields on three-month Treasury bills dipped 2 basis points to 5.85%. A basis point is one-hundredth of a percentage point. Six-month bills fell 3 basis points to 5.86%, and one-year bills were down 4 basis points at 5.89%.
The federal funds rate, the interest on overnight loans between banks, traded at 6.6875%, the same as late Wednesday.
