Dow Leaps 32.10 as Hopes for Dollar Fuel Market Rally
The stock market staged a broad advance Thursday, following through on Wednesday’s rally amid hopes for an improvement in the dollar’s performance in foreign exchange.
The Dow Jones index of 30 industrials rose 32.10 to 2,286.36, adding to its gain of 22.30 on Wednesday.
Volume on the New York Stock Exchange came to 183.06 million shares, against 173.59 million Wednesday.
The market’s recent rebound trimmed the Dow’s loss for April to 18.33. Nevertheless, it went into the books as the market’s first down month in 1987.
Analysts said stocks benefited from hopes that the dollar might be stabilizing, reducing upward pressure on interest rates.
Paul A. Volcker, chairman of the Federal Reserve Board, said the Fed had lately moved to tighten its credit policy slightly with an eye on the dollar.
The credit markets staged a robust rally in response to Volcker’s comments.
The 30-year Treasury bond, considered the most sensitive to interest rate speculation, ended the session Thursday up about 2 points, or about $22.50 per $1,000 face amount. Its yield plunged to 8.44% from 8.72% on Wednesday. The bellwether bond had lost as much as $20 on Wednesday. Short-term interest rates moved sharply lower.
Japan to Cut Rates
Meanwhile, Prime Minister Yasuhiro Nakasone of Japan told President Reagan that he had directed the Bank of Japan and the Finance Ministry to lower short-term interest rates.
Brokers also noted a warm reception for some strong first-quarter earnings reports by blue chip companies.
In one prominent instance, Ford Motor reported Wednesday that its profits hit a record in the first quarter, more than doubling the results from the comparable period last year.
Ford stock, which jumped 6 points Wednesday, climbed an additional 3 to 91 in active trading. Among other leading auto issues, General Motors added 2 5/8 to 90 and Chrysler was up 2 at 38.
Eastman Kodak, which also posted sharply higher earnings for the first three months of the year, rose 3/8 to 75 3/4.
Unisys picked up 1 3/4 to 119. The company’s directors voted an increase in the cash dividend and proposed a 3-for-1 stock split.
Texaco led the NYSE active list, up 1/8 at 33 7/8 on turnover of more than 6.4 million shares. The stock has moved up lately on rumors of an impending settlement of the company’s legal dispute with Pennzoil.
On the downside, Entex dropped 1 to 13 as the company suspended its quarterly dividend.
Advancing issues outnumbered declines by more than two to one in the overall tally on the NYSE, with 1,108 up, 499 down and 354 unchanged.
Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 211.98 million shares.
Volcker, testifying Thursday before a House Banking subcommittee, said a recent “slight snugging” on the flow of money into the economy was in line with Fed policy and contributed to the recent elevation of interest rates to levels not seen in more than a year.
There had been speculation that the Fed was behind the rising rates, which included a 1% increase in mortgage rates in a matter of a few weeks during April. But Volcker’s comments were the first public confirmation that the nation’s central bank had stepped in.
In the secondary market for Treasury bonds, prices of short-term governments rose between 1/2 point and 3/4 point, intermediate maturities ranged from 5/8 point to near 2 points higher and 20-year issues were up little more than 2 points, according to Telerate Inc.
In corporate trading, industrials rose a point in active trading and utilities were up 2 points in light trading, according to the investment firm of Salomon Bros.
Among tax-exempt municipal bonds, general obligations rose 5/8 point and revenue bonds were up 1 7/8 point, Salomon Bros. said. Trading was moderate to active.
The federal funds rate traded at 8.5%, up from 7.5% on Wednesday. Federal funds, the interest on overnight loans between banks, was supported mainly by what experts termed technical factors.
