Dow Gains 16 in Broad Stock Rally; Bonds Dip
Stock prices gained Tuesday as the market enjoyed one of its best performances this month.
However, bond prices tumbled after the Commerce Department released preliminary figures on the second-quarter gross national product along with an upward revision for the first quarter.
The Dow Jones average of 30 industrial stocks, after sporting double-digit increases during most of the session, closed near its highest level of the day, up 16.02 at 1,795.13. Broader market barometers also rose.
Advancing issues outnumbered declines by about three to two on the New York Stock Exchange as volume expanded to 138.47 million shares from 106.28 million on Monday. The Big Board’s composite index rose 1.13 to 137.38.
Some of the buying may have been inspired by renewed confidence about prospects for better corporate profits.
Investors found some comforting details in the latest government appraisal of the economy’s health.
Weakest Since Recession
The Commerce Department reported that GNP, the nation’s total output of goods and services, grew at a seasonally adjusted 1.1% annual rate in the three months ended June 30.
The second quarter’s inflation-adjusted growth was the weakest since the end of the recession more than three years ago.
But tempering the gloomy second-quarter news was an upward revision for growth in the first three months of the year. The department now estimates that the economy grew at a 3.8% clip in the first quarter, considerably faster than the earlier estimate of 2.9%.
The report also contained some good inflation figures. A price gauge linked to the GNP crept up at only a 2.1% annual rate during April through June, the slowest rate in almost two decades.
Analysts were studying what implications the GNP report might have for Federal Reserve Board policy. Some think that the central bank might take additional steps to ease credit conditions and stimulate economic activity.
Fed Chairman Paul A. Volcker is scheduled to testify before a congressional committee today, and analysts hope he gives some indications of the central bank’s intentions.
Panhandle Eastern topped the roster of actively traded stocks on the Big Board. It slid 1 3/8 to 43 3/4.
Safeway Stores rose 2 5/8 to 60 5/8 in heavy trading. There has been speculation that the firm, which received a sweetened takeover offer from Dart Group on Monday, might announce a restructuring plan.
Sears, Roebuck & Co., a component of the Dow Jones industrial average, closed up 1/2 at 43. The big retailer reported second-quarter earnings of 77 cents a share, up from 72 cents a share a year ago.
McDonald’s, another member of the Dow industrials, rose 2 1/2 to 67 7/8. The fast-food firm reported a rise in second-quarter earnings to $1.01 a share from 90 cents a year earlier.
Elsewhere in the blue-chip sector, International Business Machines rose 1 3/4 to 133 5/8, American Telephone & Telegraph rose to 24 and Eastman Kodak rose 1 3/8 to 55 1/2.
In the daily NYSE tally, 959 stocks increased in price, 628 declined and 381 were unchanged.
Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 166.29 million shares.
More Block Trades
Large blocks of 10,000 or more shares traded on the NYSE totaled 2,587, compared to 2,059 on Monday.
At the American Stock Exchange, the market-value index closed at 266.92, up 0.54. The exchange revised the closing level of the index for the past four sessions, and Monday’s close was changed to 266.38, down 0.59 from Friday.
In the bond market, long-term interest rates shot up with the yield on the Treasury’s 30-year bond finishing at 7.28%, up from 7.18% late Monday. The price of the closely watched bond skidded about 1 1/8 points, or $12.50 for each $1,000 in face value.
