Dow Climbs 22.30 in Broad Stock Advance : Market Rally Loses Steam After House Votes in Favor of Tough Amendment to Trade Bill
The stock market staged a moderate rally Wednesday, bidding to recover from its recent selloff.
The Dow Jones average of 30 industrials climbed 22.30 to 2,254.26, after struggling to a 1.42-point gain on Tuesday.
Volume on the New York Stock Exchange came to 173.59 million shares, against 180.08 million in the previous session.
On Tuesday the stock market broke a four-session losing streak, aided by signs of a stabilizing dollar in foreign exchange and an easing of upward pressure on interest rates.
Before the opening Wednesday, the Commerce Department reported that the index of leading economic indicators rose 0.4% in March.
That modest increase stemmed almost entirely from gains in stock prices. Analysts said it was consistent with expectations of a slow-growth, low-inflation economy that would presumably serve as a favorable background for the stock market.
The Dow backed off from its peak of plus-37 points late in the session however, after the House passed an amendment to trade legislation proposed by Rep. Richard A. Gephardt (D-Mo.). The Gephardt amendmendment calls for measures against countries that run large trade surpluses with the United States unless those countries take steps to reduce the surpluses.
The proposal is viewed by some Wall Streeters, along with the Reagan Administration, as posing the threat of increased international trade tensions.
Speculation continued Wednesday about the Federal Reserve’s position on interest rates. The federal funds rate, the rate on overnight loans between banks, has risen sharply in recent weeks, prompting traders to conclude that the central bank has been tightening credit in support of the dollar. Fed funds stood at 7.5% Wednesday, up from 6.688%.
Bond prices tumbled in the credit markets Wednesday on worries that House approval of the trade amendment would depress the dollar.
The Treasury’s key 30-year bond, which rose as much as $15 per $1,000 face amount on Tuesday, was off more than 2 points, or $20. Among tax-exempt municipal bonds, general obligations fell 2 points. Trading was light.
