Dow Rises 1.42; Higher Dollar Bolsters Market
The stock market moved modestly higher Tuesday in reaction to a firmer dollar and lower interest rates, although blue chip issues gave up most of their gains late in the session.
The dollar’s improvement also sent bond prices sharply higher, with the Treasury’s key 30-year bond soaring 1.563 points, or more than $15 per $1,000 in face value, while its yield slipped to 8.46% from Monday’s 8.62%.
The Dow Jones index of 30 industrials, up as much as 27.27 in late-morning trading, closed with a 1.42 gain at 2,231.96.
Volume on the Big Board totaled 180.08 million shares, against 222.71 million on Monday.
Although the closely watched industrial average barely budged from Monday’s close, the broader market posted wider gains. Advancing issues outpaced declining issues by about about five to three on the New York Stock Exchange, with 982 up, 600 down and 362 unchanged.
Analysts attributed the market’s improvement to a stronger dollar and higher bond prices--two markets partly responsible for a decline in stock prices in recent days.
“There are many traders . . . looking for stability in the dollar and improvement in the bond market to get off the sidelines and buy,” said Hugh Johnson, senior vice president of First Albany Corp. in New York.
The dollar was mostly higher on foreign exchange markets following a sharp decline in Europe and Japan on Monday. The turnaround followed a White House statement that a further drop in the U.S. currency could be “counterproductive.”
Several analysts also predicted that the dollar would strengthen even more after Japanese Prime Minister Yasuhiro Nakasone and President Reagan meet this week.
Technology stocks helped lead Tuesday’s rebound. International Business Machines was up 1 to 155; Compaq Computers rose 2 7/8 to 37 3/4, and Unisys was up 1 7/8 to 117 1/8 after rising as much as 3 1/8 at one point during the day.
Standard Oil rose 1 to 73 3/8 in active trading. British Petroleum and Standard Oil announced agreement on a sweetened takeover offer that would enable BP to acquire the rest of Standard Oil.
Among the mostly actively traded blue chips, American Telephone & Telegraph was up 3/8 to 24 3/4, General Motors was down 3/8 at 86 and Boeing fell 1 3/8 to 44 1/2.
Big losers included Minnesota Mining, down 3 to 124, and Du Pont, down 2 7/8 to 108.
Bond Prices Higher
Large blocks of 10,000 or more shares traded on the NYSE totaled 3,460, down from 3,669 on Tuesday.
In the secondary market for Treasury bonds, prices of short-term governments ranged from 3/16 point to 9/32 point higher, intermediate maturities ranged 3/8 point to 1 3/16 points higher and 20-year issues advanced 1 9/16 points, according to Salomon Bros. The movement of a point is equivalent to a change of $10 in the price of a $1,000 bond.
In corporate bond trading, industrials were up 1 point in active trading while utilities gained 3/4 point in light trading, Salomon Bros. said.
Among tax-exempt municipal bonds, general obligations rose 1/2 point in light trading and revenue bonds picked up 5/8 point in moderate trading.
Yields on three-month Treasury bills were down 4 basis points at 5.84%, Salomon Bros. said. Six-month bills rose 1 basis point to 6.11% and one-year bills fell 11 basis points to 6.31%.
The federal funds rate, the interest on overnight loans between banks, was quoted at 6.688%, up slightly from 6.625% on Monday.
