Dow Climbs 15.81 to Record High : Analysts Say Gain Not Broad-Based; Dollar, Bonds Steady
The stock market drifted aimlessly for most of the day Tuesday, then surged ahead to send the Dow Jones industrial average to its seventh straight gain and a record high.
The closely watched index, down a few points for most of the morning, closed at 2,407.35, up 15.81 points from Monday, and nearly two points above its previous record of 2,405.54 set on April 6.
Analysts noted, however, that Tuesday’s gain was not especially broad-based. On the New York Stock Exchange, advancing issues outnumbered decliners by about eight to seven.
Big Board volume totaled 157.79 million shares, compared to Monday’s 156.92 million shares, while the Dow Jones transportation and utilities indexes both fell.
Cautious Traders
“It was about as ho-hum an affair as you could imagine for a market that was setting a new record,” said Eugene Peroni, an analyst at the Janney Montgomery Scott securities firm in Philadelphia. “There was very little broad-based enthusiasm.”
Charles Jensen, a technical analyst at MKI Securities, pointed out that the gain in the Dow industrials was concentrated on a handful of stocks led by IBM, which gained 2 3/8 to 162 after unveiling a number of new products.
“It’s still a selective market. Traders are not too anxious to commit themselves,” he said.
Jensen was referring to the quarterly triple-witching hour, which comes up at the end of this week and which had been blamed as a major reason for the market’s indifferent performance all day.
In an effort to reduce volatility, the quarterly trading period will be somewhat different this time, with some of a group of expiring stock-index options and futures being settled at the opening on Friday, rather than the close.
But brokers said wide swings in the market could still develop from Thursday through Friday, as program traders engage in multiple strategies involving options or futures and individual stocks.
Analysts also said that with the second quarter drawing to a close, the market should also be helped by the “window dressing” of brokers adding selected stocks to clients’ portfolios.
AT&T; led the Big Board’s most active list at 27, up 3/4, followed closely by Southland Corp, which soared 8 7/8 to 64 3/4 on rumors that it had approved a recapitalization plan. The company said no such action had been approved.
In the meantime, bond prices changed little in quiet trading, with analysts saying there was little news to sway the market.
The Treasury’s bellwether 30-year bond rose 1/16 point, with its yield finishing unchanged from Monday’s 8.44%.
“The market took a breather,” said Marshall B. Front, an economist at the Chicago investment and mutual fund management firm of Stein Roe & Farnham. “There was just not much interest in buying or selling bonds.”
Many traders were waiting for the release of more economic data, especially gross national product figures to be announced today Wednesday and the Consumer Price Index to be released next week, said Jay Goldinger, an investment banker with Cantor, Fitzgerald & Co. Inc. in Beverly Hills.
In the meantime, there is little consensus about the economy to move the market, Goldinger said.
Treasury Bonds
In the secondary market for Treasury bonds Tuesday, prices of short-term government issues were unchanged to 1/32 point higher, intermediate maturities rose 1/16 point and long-term issues fell 1/16 point, according to figures provided by Telerate Inc.
Yields on outstanding three-month Treasury bills fell 7 basis points to 5.61%. Six-month bills rose 1 basis point to 5.94% and one-year bills were unchanged at 6.28%.
In corporate trading, industrials and utilities were unchanged in light activity.
Among tax-exempt municipal bonds, general obligations were unchanged in light trading and revenue bonds rose point in moderate trading.
The federal funds rate, the interest on overnight loans between banks, was quoted at 6.675%, down from 6.813% on Monday.
