Late Rally Sends Dow Up 5.20; Market Mixed
Stock prices, which lagged for most of Monday’s session, closed out the day mixed. Trading was boosted by a strong bond market performance and some computerized program buying, analysts said.
The late positive developments came amid continued profit taking following last Tuesday’s 43.03-point gain and an undertone of concern over the insider trading scandal and the Iranian arms imbroglio, analysts added.
The Dow Jones average of 30 industrial stocks closed at 1,930.26, up 5.20 from Friday.
But declining issues outpaced gainers on the New York Stock Exchange by more than four to three, with 893 stocks lower, 661 higher and 469 unchanged.
Volume totaled 158.98 million shares, compared to 139.82 million in the previous session. Trading was especially active toward the end, in a day that saw the Dow industrial index range at times from a loss of more than 21 points to a gain of more than 18 points.
“The bond market was a good plus for today,” said Eldon A. Grimm, an analyst at the Birr, Wilson & Co. securities firm. He said the stock market opened on Monday worried about the bond market’s sharp decline on Friday, and that the subsequent turnaround in that market Monday spilled over into stocks.
Triggered Program Trading
Other analysts noted that stock index futures rose late in the day, kicking off computerized buying schedules programmed by arbitrageurs.
Alfred E. Goldman, an analyst with the A. G. Edwards & Sons securities firm in St. Louis, said this was the major factor supporting the market, which he said was still suffering from a “headache” after hitting its record high of 1,955.57 last Tuesday.
Since then, he said, “we’ve had very normal profit taking. The market was overbought, it was worn out and needed a period of R&R.;”
Analysts said lingering worries that new developments regarding Iran or the insider trading scandal also continued to throw a damper on the day’s performance.
“The uncertainty of that is keeping the market from showing a bigger rally,” Grimm said.
British Gas PLC, a new issue, led the Big Board’s most-active trading list, closing at 9 1/8.
Carter Hawley was down 5 7/8 at 47 1/2 after word that it had rejected a sweetened takeover offer and planned to split into two companies.
IBM was up 1 1/8 at 127 3/4 and Digital Equipment was up 3 at 108 3/8.
Amoco fell 1/2 to 64 3/4, Exxon rose 1/2 to 69 3/4 and Diamond Shamrock was down at 14 5/8.
Allegany Power System was down at 47 7/8, Pacific Gas & Electric was down 1/8 at 25 3/8 and Pennsylvania Power & Light advanced 1/8 to 38 3/4.
USAir dropped 1 7/8 to 38 1/2 after agreeing to buy PS Group’s Pacific Southwest Air unit for $17 a share. PS Group rose 3 7/8 to 36 and Pacific Southwest rose 4 3/4 to 16 in over-the-counter trading.
Nationwide turnover in NYSE-listed issues, including stocks on regional exchanges and in the over-the-counter market, totaled 186.46 million shares.
Fewer Block Trades
Large blocks of 10,000 or more shares traded on the NYSE totaled 2,551, compared to 2,654 on Friday.
The NYSE index was down 0.10, at 143.59.
Standard & Poor’s index of 400 industrials fell 0.08 to 279.34, and S&P;’s 500-stock composite index was down 0.01 to 251.16.
The Wilshire index of 5,000 equities closed at 2,521.422, down 3.995.
At the American Stock Exchange, the market-value index fell 0.88 to 266.78. The NASDAQ composite index for the over-the-counter market closed at 361.01, down 1.95.
The advance in bond prices came in light trading on speculation that the Federal Reserve may eventually encourage lower interest rates to stir the economy. Short-term interest rates also rose.
Prices of 30-year U.S. Treasury bonds rose 5/8 point, or $6.25 for each $1,000 in face value of securities, and yields fell to 7.31% from 7.37%.
In the secondary market for Treasury securities, prices of short-term governments were up 1/32 point, intermediate maturities were up between 1/8 point and 3/8 point and 20-year issues rose 1/2 point, according to Salomon Bros.
