Dow Up 12.38 in Broad Stock Rally : Investors’ Optimism Rises as Interest Rates Head Lower

Stocks advanced broadly Tuesday, following a drop in interest rates sparked by statistics showing few signs of an economic upturn.

Although prices retreated in a late selling wave, the Dow Jones average of 30 industrials closed up 12.38 at 1,767.58.

In the broader market, advancers outnumbered declining issues by more than two to one among New York Stock Exchange-listed issues.

Big Board volume totaled 124.88 million shares, against 115.61 million in the previous session.

Since peaking early in September, the stock market has been depressed by what many investors believe are signs of an imminent rebound in the nation’s economy. Such a rebound could spark higher inflation and, in turn, higher interest rates.

Stocks have also been hurt by a bearish bond market, where investors were worried that further weakness in the dollar might spark higher inflation and force the Federal Reserve Board to push interest rates higher in order to attract foreign investors to dollar-denominated securities.

Syntex led the NYSE most-active list, falling 1 5/8 to 54 1/2 as 1.84 million shares changed hands. The company said a Food and Drug Administration panel was seeking more information on its anti-angina drug before recommending to the FDA whether to allow marketing of the drug.

Merrill Lynch fell 1 1/8 to 35 7/8. The investment firm announced Monday that it was selling its real estate operations.

Transportation issues showed strength, especially the airlines. AMR was up 1 to 56 3/4, Delta 3/4 to 43 7/8, TWA 3/4 to 25 5/8 and UAL 3/4 to 57.

Oil Issues Gain

Among oil companies, Amoco surged 1 1/2 to 64 7/8, Mobil 5/8 to 37 1/2, Chevron 1 to 44, Exxon 7/8 to 67 and Occidental 5/8 to 28 5/8.

Other point-plus gainers included Burroughs, up 1 1/2 to 70 3/4; Hewlett-Packard, 1 3/8 to 38 1/2; Boeing, 1 1/8 to 53 3/8; Upjohn, 1 3/4 to 86 1/2, and Dow Chemical, 1 to 53 5/8.

Among active blue chips, IBM gained to 134 1/2, USX was up to 23 3/4, AT&T; rose 1/8 to 22 3/4 and American Express climbed 2 to 56.

Large blocks of 10,000 or more shares traded on the NYSE totaled 2,626, compared to 2,180 on Monday.

Standard & Poor’s index of 400 industrials rose 1.80 to 256.06, and S&P;’s 500-stock composite index was up 1.41 to 231.32.

In the secondary market for Treasury securities, long-term bonds jumped by about $10 to $16 for each $1,000 of face value. The yield on the key 30-year issue fell to 7.61% from 7.70% late Monday.

Bond prices and interest rates move in opposite directions.

In the secondary market, prices of short-term governments rose point and intermediate maturities rose 1/2 point. Among long-term issues, the 20-year bond was up 1 22/32 point, while the 30-year issue was up 1 1/32 point, according to the investment firm of Salomon Bros. In corporate trading, industrials rose point and utilities rose 3/8 point in moderate trading.

Among tax-exempt municipal bonds, general obligations gained point in light trading and revenue bonds were up 3/8 point in moderate trading.

The federal funds rate, the interest on overnight loans between banks, traded at 6%, up from 5.875% late Monday.