Dow Remains Perched at Record High
The stock market barely budged Wednesday, encountering some resistance after Tuesday’s rise to record highs.
The Dow Jones index of 30 industrials closed at 2,407.35, unchanged from Tuesday, after drifting in a narrow range all day.
Volume on the New York Stock Exchange stepped up to 184.72 million shares from 157.79 million in the previous session.
On Tuesday, the Dow index rose 15.81 points, surpassing its previous high of 2,405.54 set on April 6.
The market began Wednesday’s activity with a seven-session winning streak, even though trading volume has plugged along at a less-than-impressive pace lately.
Analysts said stocks have benefited lately from a spreading belief that the dollar has stabilized in foreign exchange, reducing upward pressure on interest rates.
Could Turn Volatile
At the same time, money managers at many investing institutions are believed to be eager to add to their stock holdings by the end of June, when they make their midyear reports to their bosses and clients.
The market’s advance bogged down a bit, however, as some traders evidently opted to cash in on their recent gains.
There was an element of irony in Wednesday’s sluggish showing, given widespread fears of increasing market volatility this week with the approach of a quarterly “triple witching hour” involving a group of expiring stock-index options and futures.
In a change of procedure, some of those contracts will be settled as of the opening on Friday, rather than the close the same day. Thus, analysts say, the possibility still remains that the market will see some storms as early as this afternoon, in contrast to Wednesday’s calm.
Nuveen Municipal Value Fund’s $1.5-billion initial public offering, the largest in history, led the NYSE active list, trading at its offering price of 10 on volume of more than 18.2 million shares.
Atlantic Richfield gained 1 3/8 to 93 7/8. The company said it is considering selling a minority interest in its Arco Chemical unit to the public.
First Boston fell 1 to 44 3/4. On Tuesday, the company said it would report a loss for the second quarter, stemming from securities trading losses when interest rates jumped in April and May.
Among other leading investment banking issues, Salomon Inc. dropped 1 to 34 3/4 and Morgan Stanley was down 1 3/8 at 72 1/8.
Advancing issues just slightly outnumbered declines in the overall tally on the NYSE, with 777 up, 771 down and 434 unchanged. The exchange’s composite index of all its listed common stocks edged up 0.09 to a new high of 171.44.
Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 213.06 million shares.
In the credit markets, bond prices rose, bolstered by growing confidence that the dollar may have hit its lows against other currencies and that recent talk of rising inflation may have been overdone, analysts said.
Treasury Issues
The bellwether 30-year Treasury bond rose 17/32 point, or more than $5 per $1,000 of face value, with its yield dropping to 8.40% from 8.44% on Tuesday.
The government on Wednesday revised its estimate of the nation’s gross national product in the first quarter to a surprisingly strong 4.8% annual rate from the previous 4.4%. All of the improvement came from a sharper drop in the nation’s trade deficit than previously believed.
But private economists noted business inventories shot up $69.2 billion at a time consumer spending was declining for the second-straight quarter.
In the secondary market for Treasury bonds, prices of short-term governments rose 3/16 point, intermediate maturities rose 11/32 point and long-term issues were up 3/8 point, according to the investment firm of Salomon Bros.
In corporate trading, industrials rose point and utilities rose 1/2 point in active trading.
Among tax-exempt municipal bonds, general obligations rose 1/2 point and revenue bonds were up 1/2 point. Trading was moderate.
Yields on three-month Treasury bills were up 1 basis point to 5.65%. Six-month bills fell 1 basis point to 5.94% and one-year bills were off 3 basis points at 6.26%. The federal funds rate, the interest on overnight loans between banks, traded at 6.75%, up from 6.675% on Tuesday.
