Dow Rises 10.97 as Blue Chips Lead Late Rally
A late rally led by blue chips enabled the stock market to post uneven gains Wednesday, rebounding from a selloff in the previous session.
The turnaround came in spite of a second straight day of rising interest rates in the credit markets.
The Dow Jones average of 30 industrials, down 27.98 on Tuesday, rose 10.97 to 1,881.33.
Volume on the New York Stock Exchange stepped up to 154.31 million shares from 135.53 million on Tuesday.
In the credit markets, the key 30-year Treasury bond finished with a decline of 5/8 point, or $6.25 per $1,000 in face value. Its yield rose to 7.38% from Tuesday’s 7.33%.
Upward pressure on interest rates since the trading week began on Tuesday has been attributed in part to concern that inflation might revive, as reflected in climbing gold prices.
Gold Market Quiets Down
Many analysts questioned the basis of these worries, however, saying there is no strong evidence that inflation might be staging a comeback. As the gold market quieted down Wednesday, declining slightly, brokers said buyers moved into some big-name stocks.
Gainers among those blue chips included Minnesota Mining & Manufacturing, up 1 1/8 at 111; Du Pont, up 2 at 83; General Electric, up 1/2 at 76, and General Motors, up at 70 5/8.
Other auto issues were mixed as American Motors stepped up the pace of promotional competition by offering no-interest financing on most of its 1986 model cars and Jeeps. AMC shares dropped 1/8 to 2 5/8; Ford Motor lost 5/8 to 57 7/8, and Chrysler was unchanged at 38 3/4.
While many sectors of the market continued to struggle, the oil group was strong. Mobil gained 1 1/2 to 37, Exxon 1 1/8 to 69, Atlantic Richfield 1 to 58, Occidental Petroleum 5/8 to 29 5/8, Chevron 1 1/8 to 45 1/2, Amoco 1 1/8 to 68 7/8 and Texaco 5/8 to 34 1/2.
Credit market analysts said many investers were rattled by the soaring price of precious metals on Tuesday and part of Wednesday.
“It shows the bond market is very concerned about inflation,” said William Veronda, an analyst at the Denver investment firm Financial Programs Inc. Fixed-interest securities such as bonds lose value in times of inflation.
In corporate trading, industrials and utilities fell about 3/4 point in moderate dealings. Among tax-exempt municipal bonds, general obligations rose 3/8 point and revenue bonds were unchanged. Trading was light to moderate.