Rally’s on Again: Dow Sets Another Record
Wall Street’s bull market put on a renewed show of force Wednesday, extending its early-1987 advance to new record highs after some early profit taking.
The Dow Jones average of 30 industrials climbed 22.78 to 2,191.23, surpassing the record closing high of 2,179.42 it reached on Monday.
Volume on the New York Stock Exchange came to 222.43 million shares, the eighth-largest total on record, against 198.05 million in the previous session. The market has responded favorably of late to evidence that the pace of business activity is picking up.
On Tuesday, for example, the Commerce Department reported the biggest increase in its index of leading economic indicators in nearly four years.
At the same time, analysts said, traders were encouraged that interest rates held steady or even declined a bit in the Treasury bond market. The credit markets are in the midst of absorbing auctions of $29 billion in government bonds and notes this week.
Analysts saw several distinct pluses in the stock market’s behavior. For one thing, many smaller “secondary” stocks have rallied strongly this week, resuming an advance that began in dramatic fashion early in January but cooled later in the month.
Oil, Airline Stocks Up
Transportation stocks had an especially good day, pushing the Dow Jones average of 20 transportation issues up 20.10 to 911.94, for a rise of 2.25%--more than double the percentage gain posted by the industrial average.
That contributed to an unusual phenomenon: Both energy and airline stocks, groups which quite often move in opposite directions, showed some impressive gains.
Among oil stocks, which have been benefiting from the recent recovery in the world oil market, Amoco gained 3 1/2 to 76 3/4, Chevron rose 2 5/8 to 54 3/8, Exxon climbed 1 1/2 to 84, Atlantic Richfield rose 2 5/8 to 70, Texaco rose 1 1/2 to 39 3/8 and Amerada Hess rose 1 3/4 to 29 3/8.
In the oil service and drilling sector, Schlumberger rose 1 3/4 to 39 1/8, Halliburton rose 2 to 33 5/8 and Hughes Tool 1 to 12 1/2.
Point-plus gainers among the airline stocks included UAL, up 2 1/8 at 55 7/8; AMR, up 2 1/8 at 58 3/4, and Delta, up 2 3/8 at 60 1/2.
A. H. Robins soared 6 1/2 to 19 after a delayed opening. The company said it received an acquisition proposal from American Home Products, which fell 1/8 to 82 5/8.
Leading tobacco stocks lost ground on talk of possible legislation to increase cigarette taxes. Philip Morris dropped 3 to 87 1/8 and RJR Nabisco fell 1 3/8 to 61 1/2.
Advancing issues outnumbered declines by nearly three to one on the NYSE, with 1,199 up, 424 down and 355 unchanged. The exchange’s composite index added 2.03 to 159.31.
Nationwide turnover in NYSE-listed issues, including stocks on regional exchanges and in the over-the-counter market, totaled 260.16 million shares.
Bond Prices Edge Higher
In the credit markets, government bond prices moved slightly higher.
The bellwether 30-year Treasury bond was up 1/16 of a point with its yield dipping to 7.51% from 7.52% late Tuesday.
Corporate and municipal issues also edged higher.
Market analysts said bond prices were supported partly by steady demand for the Treasury’s auction of $9.75 billion in 10-year notes, which was the second phase of its $29-billion quarterly refunding.
Yields on the 10-year notes were 7.25%, the lowest level recorded for 10-year notes and unchanged from the last auction on Nov. 5.
The Treasury had sold $10.06 billion in three-year notes Tuesday and was to sell $9.25 billion in 30-year bonds today.
The federal funds rate, the interest on overnight loans between banks, was 5.875% late Wednesday, down from 6% Tuesday.
In the secondary market for Treasury securities, short-term governments ranged from 1/32 point lower to point higher, intermediate maturities were unchanged to 1/32 lower, and 20-year issues were up 1/16 point, according to Salomon Bros.
Other Yields Higher
Yields on three-month Treasury bills rose 5 basis points to 5.61%. Six-month bills were up 4 basis points at 5.60% and one-year bills were up 2 basis points to 5.60%.
In the corporate bond market, industrials were unchanged and utilities were up point in moderate trading, Salomon Bros. said.
Among tax-exempt municipal issues, general obligation bonds rose point and revenue bonds were 1/8 point higher.
Trading was light.
