Stocks Head Higher; Dow Up 6.60 : Some Expected Election Results to Produce Downturn
The stock market posted a moderate gain Wednesday, surprising analysts who had thought that investors might respond negatively to the outcome of Tuesday’s elections.
The Dow Jones average of 30 industrials rose 6.60 to 1,899.04.
Volume on the New York Stock Exchange reached 183.17 million shares, up from 163.24 million on Tuesday.
Some negative response from the market had been considered possible to the news that the Democrats took control of the Senate.
After no significant selling materialized, the Dow made several runs at the 1,900 level before finishing just short. The last time the average closed above 1,900 was Sept. 4, when it stood at a record 1,919.71.
CPC International led the active list, down 6 1/2 at 78. As part of a stock repurchase program announced Tuesday, the company said Wednesday that it agreed to buy a block of shares believed to be owned by an investor group that had been rumored to be readying a takeover bid.
Gillette rose 1/2 to 53.
Union Carbide was up 1 7/8 at 23. The company plans to reduce its debt by buying back $2.53 billion in high-yielding bonds.
Pan Am added 5/8 to 6 1/8. AMR Corp., parent company of American Airlines, said rumors that it is interested in acquiring Pan Am are unfounded.
Some aerospace issues lost ground, apparently on conjecture that a Democratic Senate would tilt the odds toward less defense spending than might have been in prospect otherwise.
Lockheed dropped 1 1/8 to 45 5/8 and Northrop 2, to 42 1/2. But Grumman was up 1/8 at 26 and McDonnell Douglas gained to 79 7/8.
Among actively traded blue chips, General Motors climbed 1 1/8 to 74 1/2, and American Telephone & Telegraph rose 1/2 to 25 1/2, while International Business Machines fell 1 5/8 to 123 1/8.
Speculation that Digital Equipment Corp. will announce a stock repurchase program at its annual meeting today drove Digital’s stock price up rose $1.375 to $103.625 a share.
Advancing issues outnumbered declines by more than three to two in the overall tally on the Big Board, with 972 up, 630 down and 412 unchanged.
Large blocks of 10,000 or more shares traded on the NYSE totaled 3,869, compared to 3,256 Tuesday.
Little Change in Bonds
In the credit markets, bond prices held fairly steady in quiet trading after the second portion of the record quarterly U.S. Treasury refunding.
Bond prices did dip, but just briefly, early in trading on the news that Democrats took control of the Senate in Tuesday’s elections.
In the latest Treasury auction, yields on 10-year U.S. Treasury notes dropped to 7.25%, the lowest level in the decade that the government has been selling those securities.
The average yield was down from 7.47% at the last such auction May 15.
The sale attracted bids totaling $24.7 billion with $9.8 billion sold. The notes will carry a coupon rate of 7.25%.
That auction was the second in a series of three auctions this week aimed at raising a record $29 billion during the government’s quarterly refunding operation.
Maria Ramirez, an analyst with Drexel Burnham Lambert, said: “The results of the auction were as expected. We were able to get out of another auction without any major swings.”
Analysts had said there was ample demand, too, at Tuesday’s auction of $10 billion in three-year notes, the first stage of the refunding.
The Treasury is to sell $9.25 billion of 30-year bonds today.
The Treasury’s key 30-year bond lost $1.25 for each $1,000 in face amount, and its yield rose to 7.59% from 7.57% late Tuesday.
Prices of short-term governments were down 1/32 point, intermediate maturities fell 3/32 point and long-term issues were down 5/16 point, according to the investment firm of Salomon Bros.
In corporate trading, industrials were unchanged and utilities were up point in quiet trading.
Among tax-exempt municipal bonds, general obligations and revenue issues rose point.
