Stocks Edge Higher; Dow Up 4.50 : Bonds Falter Amid Fears of OPEC Production Accord
The stock market struggled to a small gain Thursday, extending Wednesday’s late rally with encouragement from some strong corporate earnings reports.
The Dow Jones average of 30 industrials rose 4.50 to 1,836.19, bringing its gain since the start of the week to 43.02 points.
Volume on the New York Stock Exchange reached 156.92 million shares, up from 145.01 million the day before.
Analysts noted that stocks of several prominent companies got a lift from unexpectedly favorable earnings. Sluggish economic statistics of late had raised concerns that the current round of corporate reports would produce more disappointments than pleasant surprises.
At the same time, brokers said, many investors remained skeptical about the durability of the market’s recent advance.
They also noted a touch of caution in advance of Friday’s session, which marks the last trading of a set of options and futures on stock indexes.
The day’s economic news provided nothing dramatic. The Federal Reserve reported that industrial production rose 0.1% in September, matching its performance in the preceding month.
Digital Equipment rose 1 3/4 to 95 3/4. The company said late Wednesday that its profit for its latest fiscal quarter more than doubled from year-earlier levels.
Coca-Cola, which reported higher third-quarter earnings, gained 1 3/4 to 39.
Takeover Speculation
Lomas & Nettleton Financial gained 4 3/8 to 48. The company, evidently the subject of takeover speculation, said it knew of no reason for the recent heavy activity in its stock.
E. F. Hutton dropped 2 3/8 to 46 3/8. The company, which has been rumored to be a possible takeover candidate, said it has received no offers and isn’t engaged in any talks on the subject.
Dynalectron fell 1 1/8 to 14 3/4 to rank as one of the session’s biggest percentage losers. The company said the Army is studying whether it should be suspended from receiving new government contracts pending the resolution of a legal case involving a Dynalectron subsidiary.
Bond prices turned lower as investors reacted negatively to a report that OPEC oil ministers were making progress toward a new production quota agreement.
The cartel’s president, Rilwanu Luckman said the oil ministers, who have been meeting in Geneva since Oct. 6, are determined to reach an accord. Talks will to resume today, Luckman said.
If OPEC succeeds in reaching an agreement, oil prices are almost certain to rise, and that makes many bond investors nervous because it could cause a rise in inflation, a major enemy of the credit markets, analysts say.
The U.S. Treasury’s bellwether 30-year bond fell about $5 per $1,000 face amount. Its yield rose to 7.80% from 7.76% late Wednesday.
In corporate trading, industrials were unchanged and utilities fell point in active trading.
Among tax-exempt municipal bonds, general obligations were unchanged and revenue bonds were down point.
