The Dow Jones average of 30 industrials climbed 18.42 to a seven-week high Wednesday. At the session's end, the index stood at 1,881.33, its highest close since it hit 1,900.87 on July 3.
Its record closing high of 1,909.03 was reached July 2.
Volume on the New York Stock Exchange reached 156.60 million shares, up from 109.31 million on Tuesday.
The Fed announced a cut in the discount rate, to 5.5% from 6%, after the close in New York. However, analysts said the possibility of such a move had been talked up during the day as more evidence accumulated that the economy remained sluggish.
Philadelphia Electric led the NYSE active list, up at 23 7/8 on volume of more than 13 million shares. Analysts said investing institutions were trading the stock in large blocks in maneuvers designed to capture the company's 55-cents-a-share quarterly dividend.
Other utility issues also advanced, with American Electric Power up 1 1/8 at 31 1/8, Commonwealth Edison up 1/2 at 34 and Middle South Utilities up at 14 7/8. The Dow Jones average of 15 utilities jumped 5.77 to a record 219.15.
Cannon Grouup Drops
Utility issues are often highly responsive to declining interest rates. In addition, they and other high-yielding stocks have attracted attention lately because dividends and capital gains would have equal status under the pending tax bill.
The stock value of Cannon Group plunged 10% a day after the company disclosed that the Securities and Exchange Commission is probing the way it accounts for movie costs and revenue. In composite trading, the film maker's stock closed at $31.25 per share, down $3 for the day.
USX rose 2 1/8 to 19 1/2. The firm said it had been notified that a Bell Resources Ltd. unit planned to buy as much as 15% of its stock.
Among other blue chips contributing to the Dow Jones industrials' gain were International Business Machines, up 2 1/2 at 139; Philip Morris, up 1 3/8 at 75 5/8; Minnesota Mining & Manufacturing, up 1 7/8 at 111 1/2, and General Motors, up 1 at 74 1/8.
Advancing issues outnumbered decliners by about two to one in the overall tally on the Big Board. The exchange's composite index gained 1.73 to 143.64.
Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 183.50 million shares.
Large blocks of 10,000 or more shares traded on the NYSE totaled 2,918, compared to 2,078 on Tuesday.
The Wilshire index of 5,000 equities closed at 2,544.848, up 28.760.
Standard & Poor's index of 400 industrials rose 3.03 to 274.77, and S&P;'s 500-stock composite index was up 3.26 at 249.77.
The NASDAQ composite index for the over-the-counter market added 2.11 to 380.93. At the American Stock Exchange, the market-value index closed at 271.37, up 0.78.
Bond Prices Rise
Bond prices pushed generally higher and interest rates fell as dealers reacted to the long-awaited news of the Fed's cut in the discount rate.
But credit market analysts said profit taking kept the market from rising even further.
The bellwether 30-year bond increased just 1/16 point to yield 7.17%, unchanged from late Tuesday, and 20-year maturities fell 5/16.
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 the secondary market for Treasury bonds, prices of short-term governments rose point and intermediate maturities rose 5/16 point, according to the investment firm of Salomon Bros.
The Merrill Lynch daily Treasury index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, rose 0.23 to 119.98. The Shearson Lehman daily Treasury bond index, which makes a similar measurement, rose 1.18 to 1,255.19.
Revenue Bonds Unchanged
In corporate trading, industrials rose 1/8 point and utilities fell point in light to moderate trading.
Among tax-exempt municipal bonds, general obligations rose point and revenue bonds were unchanged. Trading was light to moderate.
Yields on three-month Treasury bills were down 11 basis points to 5.43%. Six-month bills fell 10 basis points to 5.45%. One-year bills were down 7 basis points at 5.46%. A basis point is one-hundredth of a percentage point.
The federal funds rate, the interest on overnight loans between banks, traded at 6.125%, down from 6.25% late Tuesday.