Market Posts Its 4th Straight Gain : Dow Rebounds From Previous Day’s Selloff Jolt, Up 6.52
The stock market managed to post its fourth consecutive gain in quiet trading Thursday, recovering from the jolt of a late selloff in the previous session.
The Dow Jones average of 30 industrials rose 6.52 to 2,360.13, bringing its gain since the start of the week to 33.98 points.
Volume on the New York Stock Exchange slowed to 138.86 million shares from 197.44 million on Wednesday.
Stocks took a tumble Wednesday afternoon in selling that wiped out most of a broad early gain. But the market steadied before the close to finish just barely on the plus side.
Analysts said that showing impressed some traders who had regarded the market as vulnerable to profit-taking.
Another plus Thursday was a drop in open market interest rates. The Treasury’s 30-year bond traded up about 1/2 point late in the day, or about $5 for every $1,000 in face amount. The yield, which moves inversely to the bond’s price, slipped to 8.67% from 8.73% late Wednesday.
Unsettled Activity
Wall Streeters have shown no strong reaction either way to the economic summit meeting that was held in Venice this week. President Reagan asserted Thursday that the talks had produced “significant steps” toward improving the international economic climate.
There was a brief period of unsettled activity after Reagan said at a news conference that the possibility of some further decline in the dollar’s value was “within reason.”
However, the White House soon afterward said Reagan was not suggesting that he considered such a development desirable.
International Business Machines slipped 1/8 to 157 5/8 after trading higher for most of the session. Late Thursday the company denied rumors that it was experiencing problems that might delay its new personal computer.
Some retailing issues moved up, variously bolstered by analysts’ favorable comments or takeover speculation. J. C. Penney rose 1 1/2 to 56, K mart was up to 42 3/4 and Federated Department Stores rose 1 1/2 to 53.
The Commerce Department reported that retail sales dropped 0.6% in May, but most of the weakness was accounted for by the auto sector.
Stocks of leading domestic auto makers finished narrowly mixed, with General Motors up 3/8 at 84 3/8, Chrysler down 3/8 at 35 1/2 and Ford Motor off 1/8 at 93 5/8.
Newmark & Lewis, traded on the American Stock Exchange, fell 2 to 8 1/2 as the company reported sharply lower quarterly earnings.
Advancing issues outnumbered declines by more than four to three in the daily tally on the NYSE. The exchange’s composite index rose 0.71 to 168.24.
Short-Term Bonds Up
Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 162.90 million shares.
Standard & Poor’s index of 400 industrials rose 1.15 to 346.17, and S&P;’s 500-stock composite index was up 1.26 at 298.73. The Wilshire index of 5,000 equities closed at 2,961.696 up 12.430.
The NASDAQ composite index for the over-the-counter market added 0.56 to 423.37. At the Amex, the market-value index closed at 333.00, up 0.66.
In the bond market, prices moved up slightly amid some confusion over economic signals.
Analysts said credit market traders were perplexed by apparently contradictory readings of the economy’s health.
Analysts said the government’s monthly report on retail sales appeared relatively weak, showing a 0.6% drop in May. But key commodity prices rose Thursday, reinforcing fears that inflation has been refueled.
“There is uncertainty in the market about whether bad news is really good news,” said Brian Wesbury, economic analyst for the Harris Bank in Chicago.
Wesbury said traders remained suspicious about the future course of prices and interest rates.
Under normal circumstances, he said, rising prices would be bearish for bonds because they tend to drive interest rates higher and dilute the return on fixed-rate investments.
But with the dollar weakening in foreign exchange, some experts contend a slight increase in short-term interest rates might actually help the bond market by dashing the lingering concerns about inflation.
“You’ve got to get short-term rates up to bring long-term rates down,” Wesbury said.
Analysts said the anxiously awaited government reports on merchandise trade and producer prices, due to be released today, could help clarify the murky outlook for the dollar and inflation.
In the secondary market for Treasury bonds, prices of short-term government issues were up between 1/16 point and 3/16 point, intermediate maturities rose between 7/32 point and 13/32 point and 20-year issues were up 5/16 point, according to figures provided by the financial information service Telerate Inc.
In corporate trading, industrials were up point and utilities rose 3/8 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, Salomon Bros. said. Trading was quiet.
Yields on three-month Treasury bills were up 6 basis points to 5.52%. A basis point is one-hundredth of a percentage point. Six-month bills rose 2 basis points to 5.87% and one-year bills were off 1 basis point at 6.31%.
The federal funds rate, the interest on overnight loans between banks, traded at 6.688%, unchanged from late Wednesday.
