Dow Index Leaps 30.80 as Bargain Hunters Push Market Broadly Higher
Stock prices staged a broad advance on Monday, turning in their strongest showing since the market’s early September selloff. But trading was light, and analysts said they were not ready to proclaim a complete recovery from the battering suffered two weeks ago.
The Dow Jones average of 30 industrials jumped 30.80 to 1,793.45. Volume on the New York Stock Exchange came to 126.06 million shares, against 153.86 million on Friday.
Analysts said bargain hunting was encouraged by declines in open-market interest rates. There was also some relief among Wall Streeters that last Friday’s “triple witching hour” had passed without any significant damage to stock prices.
On several occasions in the past, the last trading in a set of expiring stock index futures, index options and options on individual stocks has produced wide swings in the markets. This time, however, prices remained relatively steady.
Little to Stir Enthusiasm
Other than that, brokers said there was little in the news to stir enthusiasm for stocks. Many Wall Streeters believe that investors’ confidence will need longer to revive after the kind of losses that they have sustained lately.
Today, government reports are expected on the consumer price index and on new orders for durable goods last month. But analysts say those figures by themselves are unlikely to clear up confusion about the outlook for the economy and the inflation rate.
The most intense activity on Monday focused on stocks involved in takeover news and speculation.
Robertshaw Controls jumped 14 1/2 to 84. The company said it agreed to be acquired by Siebe PLC of Britain for $85 a share in cash.
Anderson, Clayton gained 4 3/8 to 60 1/2. After the close on Friday, Ralston Purina said it was making a $62-a-share bid for the company.
USX Most Active
USX led the active list, unchanged at 25 1/8 on turnover of more than 13.5 million shares. The stock climbed 4 5/8 points last week amid rumors that one or more large investors were building up positions in it.
Point-plus gainers among the blue chips included General Electric, up 2 1/8 at 73; International Business Machines, up 1 3/4 at 138 5/8; Ford Motor, up 2 at 54; Du Pont, up 1 3/4 at 81 3/4 and Minnesota Mining & Manufacturing, up 1 7/8 at 103.
In the overall tally on the Big Board, advancing issues outnumbered declines by nearly five to two.
Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 151.34 million shares.
Standard & Poor’s index of 400 industrials rose 3.04 to 260.11, and S&P;’s 500-stock composite index was up 2.72 at 234.93.
Large blocks of 10,000 or more shares traded on the NYSE totaled 2,311, compared to 2,835 Friday.
Bond prices moved higher following the dollar’s rebound from five-year lows reached late last week against major foreign currencies. The bellwether 30-year Treasury bond rose about 5/8 point, with its yield dipping to 7.79% from 7.83% late Friday.
Dollar Up Sharply
Bond prices have been generally declining for weeks amid speculation that a weak dollar and easy government monetary policy could lead to a rekindling of high inflation.
The dollar jumped sharply on Monday on reports that the 12 Common Market nations had agreed over the weekend to privately urge the United States to halt attempts to depress the currency’s foreign exchange value.
David Hale, chief economist for Kemper Financial Services in Chicago, said such an agreement probably was just the latest move aimed at slowing the dollar’s fall. He noted that government current account figures released last week indicated that 40% of the capital flowing into the United States during the second quarter came from foreign central bank purchases of U.S. securities.
“What foreign central banks are telling us is ‘if you stop pushing your currency down, we’ll finance your budget deficit for you,’ ” Hale said.
Ben Laden, chief economist for T. Rowe Price in Baltimore, said he believed that Monday’s gains were to be expected following the “impressive” declines of the past several weeks. He added that the market remained skeptical over the chances of further interest rate cuts by the Federal Reserve Board or foreign central banks and said that any Common Market intervention to support the dollar would not succeed without rate cuts.
“What it looks like to the market is simply a war of words and a lot of rhetoric but no real basis for any action,” Laden said.
In the secondary market for Treasury bonds, prices of short-term governments rose 1/16 point, intermediate maturities rose in the range of 5/32 point to 5/16 point and long-term issues were up 9/16 to 5/8 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.
The Merrill Lynch daily Treasury index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, rose 0.21 to 116.16. The Shearson Lehman daily Treasury bond index, which makes a similar measurement, rose 2.26 to 1,216.96.
In corporate trading, industrials and utilities rose point in light to moderate trading.
Among tax-exempt municipal bonds, general obligations were up point and dollar bonds rose 3/8 point. Trading was light.
Yields on three-month Treasury bills were unchanged at 5.24%. Six-month bills fell 4 basis points to 5.39%, and one-year bills were off 4 basis points at 5.48%. A basis point is one-hundredth of a percentage point.
The federal funds rate, the interest on overnight loans between banks, traded at 5.9375%, up from 5.75% late Friday.
