Late Buying Pushes Dow Up 16.39 : Volume Remains Sluggish as Traders Eye Venice Summit
Wall Street stocks carried the “Greenspan rally” to the close of a second session Thursday, with support coming from a firming dollar and bond market and a steady stream of takeover-related activity. The pace of trading remained sluggish, however.
The Dow Jones industrial average jumped 16.39 to 2,337.08, adding to Wednesday’s 42.47-point rise.
New York Stock Exchange volume was 140.30 million shares, down from 164.17 million the day before.
Analysts noted that after Federal Reserve Chairman Paul A. Volcker announced his plans to leave the Fed, making way for Alan Greenspan as his designated successor, the stock market first recoiled but then began a steady movement upward.
Stocks and bonds benefited from widespread praise for Volcker’s successor apparent. Many Wall Streeters spoke of Greenspan as a “Volcker clone” on policy matters.
But observers weren’t totally impressed by the advance in stock prices Wednesday and Thursday, noting that it lacked the kind of trading volume that would suggest broad-based enthusiasm.
Wait-and-See Attitude
They said some investors apparently were inclined to stay with a cautious approach pending next week’s economic summit meeting in Venice.
Before that, the next item on the agenda for investors is Friday’s monthly report from the Labor Department on the employment situation. Traders will be watching to see whether recent strong growth in non-farm payroll employment continued in May.
Waste Management led the active list on the Big Board, down 2 1/8 at 40 on a Wall Street Journal report of a federal antitrust investigation into practices in the waste disposal industry.
Gainers among the blue chips included International Business Machines, up 1 1/8 at 161 3/8; Merck, up 7/8 at 160 1/8; DuPont, up 2 at 116; Eastman Kodak, up 3/4 at 79 3/4, and Minnesota Mining & Manufacturing, up 3/4 at 130.
British stocks lost ground amid some evident uncertainty about approaching elections there. Barclays fell 1 7/8 to 34 1/2; National Westminster lost 1 1/8 to 32 5/8; British Telecom fell 1 to 51 3/4, and British Gas lost 7/8 to 29 1/8.
In contrast, leading Japanese stocks moved up. Hitachi gained 3 to 77, Honda Motor rose 5 5/8 to 104 and Matsushita Electrical gained 2 to 132 3/4.
Sea Containers Ltd. picked up 2 1/2 to 21, posting one of the day’s best percentage increases. The company said it stood a good chance of posting its second-best earnings ever this year after recording a loss in 1986.
Echlin Manufacturing dropped 1 to 16. The company estimated lower earnings for the fiscal quarter that ended Sunday.
Large blocks of 10,000 or more shares traded on the NYSE totaled 2,801, compared to 3,337 on Wednesday.
Advancing issues outnumbered declines by about three to two on the NYSE.
The bond market also managed some slight gains.
The Treasury’s 30-year bond traded up about 5/16 point late in the day, or just over $3 for every $1,000 in face amount. The yield, which moves inversely to the bond’s price, slipped to 8.73% from 8.75% Wednesday.
Trading was described as extremely light, however.
In other markets, corporate and municipal bonds also rose. Short-term interest rates were slightly lower.
Industrials, Utilities Up
In the secondary market for Treasury bonds, prices of short-term governments were unchanged to 1/16 point higher, intermediate maturities were up between 3/32 and 3/8 point and 20-year issues increased 3/16 point, according to figures provided by Telerate Systems.
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 and utilities were up point in light trading, according to the investment firm Salomon Bros.
Among tax-exempt municipal bonds, general obligations rose point and revenue bonds were up 3/8 point. Trading was light.
Yields on three-month Treasury bills were unchanged at 5.67%. Six-month bills were off 1 basis point to 6.07% and one-year bills were down 2 basis points at 6.39%.
The federal funds rate, the interest on overnight loans between banks, traded at 6.688%, down from 7.50% Wednesday.
