Market Rallies in Late Buying Spree; Dow Jumps 12.94 : Stock Analysts Cite Strong Profit Reports, Weak Dollar
Stock prices surged in a late buying spree Wednesday and pushed the Dow Jones industrial average to its 15th record-high close of 1987, capping a seesaw session caused partly by computerized trading.
Wall Street’s most widely followed indicator swung in a narrow range through most of the day but snapped out of that pattern in the last half hour and rose 12.94 points to a record 2,163.39. The Dow Jones industrial average has risen 267.44 points since the year began, an increase of 14.1%.
Broader market barometers also shattered records, supporting a widespread view on Wall Street that the new year rally remains strong. Analysts also credited the market’s gains to higher corporate profits and the beneficial effect of the lower dollar on overseas sales by U.S. multinational companies.
In the bond market, prices rose as rumors circulated about possible action to stabilize dollar-dominated credit markets and after the Treasury announced that it will auction $29 billion in notes next week.
Bank of Japan governor Satoshi Sumita had hinted Wednesday that the nations in the so-called Group of Five--Japan, West Germany, France, Britain and the United States--were moving in the direction of a meeting, although he said no specific plans had been made.
The government’s bellwether 30-year bond was up 3/8 point while its yield fell to 7.44% from 7.48% late Tuesday.
Three issues advanced for every one that fell on the New York Stock Exchange.
Brokers said the market seesawed through much of the day because of program trading, a form of arbitrage that utilizes computers to automatically buy and sell massive amounts of stock instantaneously, thereby profiting from disparities between the stock price and corresponding stock futures price.
Among the most heavily traded issues, Philip Morris rose 2 3/8 to 87 and Bethlehem Steel advanced 1/2 to 7 5/8 after both companies reported higher earnings.
The stocks of multinational drug and paper companies climbed, benefiting from the belief that those companies will do well overseas because of the cheaper dollar. Merck rose 2 7/8 to 139 3/4, Eli Lilly advanced 1 1/2 to 29 3/8, Federal Paper Board climbed 2 3/8 to 39 3/8 and Northern Nekoosa added 1 3/8 to 86.
Kimberley Clark jumped 10 1/2 to 108 1/2. The company on Tuesday announced a stock buyback, declared a two-for-one stock split, raised its dividend and reported higher earnings.
Monsanto fell 1 1/2 to 77 1/2, apparently because of rising concern over the company’s Nutrasweet artificial sweetener, which has suffered declining sales.
Large blocks of 10,000 or more shares traded on the NYSE totaled 3,799, compared to 3,795.
Other Records Set
The NYSE composite index rose 0.87 to 156.72, breaking the previous record of 155.97 set Jan. 22. The American Stock Exchange’s market-value index rose to 299.49, up 1.66 from the previous high set Tuesday.
Corporate and municipal bond issues were mixed.
Yields on three-month Treasury bills fell one basis point to 5.45%. Six-month bills were down 4 basis points to 5.40% and 1-year bills dropped 3 basis points to 5.45%.
The federal funds rate, the interest on overnight loans between banks, traded at 6.50%, up from 6.063% late Tuesday.
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