Stocks Rise Slightly in Slow Session : Dow Climbs 10.27; IBM and Takeover Targets Post Gains
Stock prices rose slightly Monday, helped by strong demand for International Business Machines and a few other notable issues, but the broad market drifted in one of the slowest sessions this year.
“There was very little to exult over,” said Lawrence Wachtel, an analyst at the New York investment firm Prudential-Bache Securities. He said the market “was moving up in a vacuum, and that’s not sustainable.”
The Dow Jones average of 30 industrial stocks, Wall Street’s best-known barometer, remained marginally ahead the entire day and finished at 1,784.45, a gain of 10.27 points. Broader market indexes showed slight advances.
There were eight gaining issues for every seven that declined on the New York Stock Exchange, and volume totaled only 88.25 million shares, reflecting the slowest pace since May 19, when 85.84 million shares were traded. By contrast, the NYSE volume figure on Friday totaled 128.09 million.
Analysts said investors remain wary and confused about the overall direction of the market, largely due to the uncertainties of third-quarter earnings reports, the outlook for interest rates and pending political developments such as the Reagan-Gorbachev summit and the Nov. 4 elections.
“Money managers and investors are confused as to where the new strength in the market will emerge,” said Theodore Halligan, an analyst at the firm of Piper, Jaffray & Hopwood.
Most analysts said a major reason for the market’s advance was IBM, historically a strong influence over the direction of blue-chip stocks. It jumped 2 5/8 to 133 1/2, partly because of press reports that suggested that the world’s largest computer company would enjoy a healthy year in 1987.
Transportation Issues Climb
Strength in transportation companies such as airlines and railroads also contributed to the overall gain. AMR rose 7/8 to 58 7/8, Delta jumped 1 1/2 to 47, Burlington Northern rose 1 7/8 to 58 and Norfolk Southern advanced 1 1/2 to 82 1/2.
Among other notable issues, Lucky Stores rose 7/8 to 36 7/8 on volume of 1.6 million shares. The grocery chain’s board rejected a $35-a-share takeover offer from New York investor Asher B. Edelman and said it would explore ways to boost the value of Lucky’s stock.
The Big Board’s most active stock was steel giant USX, the subject of repeated takeover speculation in recent weeks. It rose to 26 1/2 on volume of nearly 3 million shares.
After the market closed, financier Carl C. Icahn said he has made an offer to acquire USX for $31 a share, or about $8 billion. The deal is conditioned on USX’s board supporting the offer.
Viacom jumped 1 7/8 to 42 3/4 on volume of 1.2 million shares, which analysts linked to press reports suggesting that a takeover battle may emerge for the rapidly growing entertainment company.
Retail stocks were widely lower. Federated dropped 1 1/8 to 86 5/8, and K mart declined 1 1/8 to 45 1/2.
In the credit markets, bond prices and short-term interest rates were little changed as traders looked for clues about the Federal Reserve Board’s monetary policy.
In the secondary market for Treasury bonds, prices of short-term governments rose 2/32 point, intermediate maturities were up by between 3/32 point and 10/32 point and long-term issues were unchanged to up 2/32 point, according to the investment firm Salomon Bros.
