Dow Rises 13.35 in Late Stock Rally : Big Burst of ‘Program Trading’ Propels Drifting Market
Stock prices turned higher in a late-session burst of “program trading” after having drifted aimlessly for most of the day Tuesday. The Dow Jones average of 30 industrials closed up 13.35 at 1,936.16.
At the New York Stock Exchange, volume totaled 157.04 million shares, compared to 148.22 million on Monday.
Gainers outpaced decliners by about seven to five, with 931 issues up, 658 down and 465 unchanged.
Professional traders sparked the buying in the last hour, using computers to play off differences between stock-index futures and their underlying “baskets” of stocks, analysts said.
The market opened with a follow-through of Monday’s late rally--to a 10.55-point gain after the closely watched index had been down by as much as 15 points.
But Tuesday’s early surge eased quickly into levels close to the break-even point for most of the day.
In the end, it was program traders who broke the market out of the doldrums, according to Alfred E. Goldman, an analyst with A. G. Edwards & Sons in St. Louis.
“Jitters over the ‘triple witching hour’ have been working into the market for the past week,” he added. But Goldman said he believed that those fears probably reached a peak early in the session.
The “triple witching hour” occurs when the last trading takes place in a set of expiring stock-index futures, stock-index options and options on individual stocks.
Rumors About USX
Some past witching hours have produced wide and unpredictable swings in stock prices as program traders completed maneuvers involving futures or options and individual stocks.
Among most active issues at the NYSE, USX was up 3/4 at 22, amid renewed takeover rumors inspired by rumors that the Donaldson, Lufkin & Jenrette securities firm had placed the steel company’s stock on its restricted list.
The brokerage house declined to comment. Being put on such a list can indicate that a brokerage house may be representing a potential buyer.
Pan Am led the Big Board active list at 4 1/2, down 3/8, while Federal National Mortgage Assn. was up 2 5/8 at 40 5/8.
Beneficial Corp., which has said it might not be selling its businesses as quickly as expected, was down 1 7/8 at 57 1/8. IBM was up 1/2 at 128 1/8, General Electric was up 2 1/8 at 87 1/2 and General Motors was down 1/2 at 69.
Coca-Cola was up 1 at 39 and Exxon was up at 72 5/8.
Large blocks of 10,000 or more shares traded on the NYSE totaled 2,910, compared to Monday’s 2,532.
Key Indexes Rise
Nationwide turnover in NYSE-listed issues, including stocks on regional exchanges and in the over-the-counter market, totaled 185.17 million shares.
The NYSE index was up 1.00 at 142.87.
Standard & Poor’s index of 400 industrials rose 1.94 to 278.08, and S&P;’s 500-stock composite index was up 1.83 at 250.04.
The Wilshire index of 5,000 equities closed at 2,502.346, up 15.066.
The American Stock Exchange index rose 0.57 to 263.77. The NASDAQ composite index closed at 353.77, up 0.45.
The bond market ended mostly higher in thin trading.
The Treasury’s bellwether 30-year bond, which had fallen over the past few days in response to rising oil prices, was up about point, or $2.50 per $1,000 face amount. Its yield dipped to 7.38% from 7.40% late Monday.
In the secondary market for Treasury securities, short-term governments ranged from up 1/32 point to down 1/32 point.
Among tax-exempt municipal bonds, general obligations and revenue bonds rose 1/8 point.
Yields on three-month Treasury bills were up 5 basis points at 5.55%. Six-month bills were up 1 basis point at 5.55% and one-year bills were off 1 basis point at 5.54%, according to Telerate.
The federal funds rate, the interest on overnight loans between banks, traded at 6.25%, down from 6.575% Monday.
