Dow Jumps 9.10 as Rally Resumes : Analysts Credit Upturn on Surge of Program-Trading
The stock market staged an uneven rally Thursday, rebounding from Wednesday’s mild setback and nudging the Dow Jones industrial index to a new closing high.
Dow Jones’ average of 30 blue chips rose 9.10 to 2,372.59, topping the previous record closing high of 2,369.18 set on Tuesday. But other, broader market measures showed less impressive gains.
Volume on the New York Stock Exchange came to 196.04 million shares, up from 171.34 million in the previous session.
Analysts said the market benefited from buying by professional traders engaged in computer-program strategies involving options and futures on stock indexes, as well as many of the individual stocks that are components of those indexes.
Conrail Led List
The Dow index sported a gain of about 23 points at its midday peak. After that, prices followed an erratic course.
Consolidated Rail Corp. led the active list, trading at 30 3/4 on volume of more than 18.8 million shares, after an initial public offering of 58.75 million shares at 28.
The sale of Conrail shares by the government was the largest stock offering in U.S. history.
Standard Oil jumped 6 1/2 to 71 3/8. British Petroleum said it plans to offer $70 a share for all the Standard Oil stock it doesn’t already own.
Federated Department Stores gained 5 5/8 to 102. The company declared a 2-for-1 stock split and a dividend increase.
Hospital Corp. of America rose 1 to 37 3/4, Humana gained 1/2 to 26, National Medical Enterprises climbed 5/8 to 29 5/8 and American Medical International advanced to 19 3/8. David Lothson, health-care analyst at Paine Webber, raised his ratings of several stocks in the hospital management group.
Wendy’s International fell 7/8 to 11 3/4, posting one of the day’s biggest percentage declines. Several analysts have dismissed recent talk that Wendy’s might become a takeover target.
Advancing issues slightly outnumbered declines on the NYSE, with 796 up, 742 down and 434 unchanged.
In the credit markets, bond prices moved modestly higher, buoyed by further strength in the dollar and a favorable reception by investors to the Treasury’s sale of $25 billion in securities this week.
The bellwether 30-year Treasury bond rose about 7/32 point, or nearly $2.50 per $1,000 in face value, while its yield was 7.55%, down from 7.57% on Wednesday.
Yields on $7.25 billion in seven-year Treasury notes fell in Thursday’s auction to an average of 7.04%, down slightly from 7.09% at the last auction on Dec. 30 and the lowest rate since 7.02% on Nov. 4, 1976.
Foreign investors such as the Japanese have been major purchasers of U.S. securities in recent years, and sagging foreign demand could have forced interest rates higher in order to attract buyers.
Analysts have said the results of Tuesday’s auction of $10.03 billion in two-year notes and Wednesday’s sale of $7.81 billion in four-year notes also were well received by the market.
In the secondary market for Treasury bonds, prices of short-term government securities were up about 3/32 point, intermediate government securities were up about 1/8 point and 20-year issues were up by 7/16 point, according to the investment firm Salomon Bros. The movement of a point is equivalent to a change of $10 in the price of a bond with a $1,000 face value.
In corporate trading, industrials were up 1/8 point in moderate trading and utilities were up 1/2 point in moderate trading, Salomon Bros. said.
Among tax-exempt municipal bonds, general obligations were unchanged and revenue bonds rose 1/2 point in light to moderate trading.
Yields on three-month Treasury bills were 5.57%, unchanged from late Wednesday, six-month bills were up 1 basis point at 5.59% and one-year bills rose 1 basis point to 5.72%, Salomon Bros. said. A basis point is one hundredth of a percentage point.
The federal funds rate, the interest on overnight loans between banks, was quoted at 6.125%, unchanged from Wednesday.
