Dow Up 22.64 to New High as Rally Resumes

The stock market climbed to new highs Thursday, rebounding from a mild setback Tuesday and Wednesday.

Analysts said declining interest rates helped the market resume the rally it began about a month ago.

The Dow Jones index of 30 industrials jumped 22.64 to 2,451.05, surpassing its previous closing peak of 2,445.51 reached on Monday.

Volume on the New York Stock Exchange stepped up to 173.52 million shares from 153.76 million in the previous session.

The dollar showed strength in foreign exchange early Thursday, recovering from a couple of days of weakness.

That helped send interest rates lower in the credit markets. The Treasury’s key 30-year bond rose 5/16 point, or more than $3 for each $1,000 face amount, after falling 11/32 point on Wednesday. Its yield fell to 8.42% from 8.44%.

Analysts said stocks also appeared to benefit from 11th-hour buying by money managers at investing institutions, seeking to show heavily invested positions in stocks when they make their midyear reports to clients.

After this period of so-called window-dressing ends, brokers say it may well take some impressive corporate earnings reports for the second quarter to keep the market’s advance on track.

IBM at High

One negative in the recent market picture, many observers have noted, has been an absence of widespread gains, particularly among smaller “secondary” issues.

While the Dow advanced to a new high Thursday, only 77 NYSE-listed issues out of nearly 2,000 that traded reached new 52-week highs.

Continuing a persistent advance that began in mid-January, IBM was traded heavily and rose 2 to close at 168 1/8, its highest ever. The gain brought IBM’s total market capitalization to a staggering $102 billion.

Chrysler gained 3/8 to 35 7/8 after trading lower for most of the session. On Wednesday, the company and two of its officials were indicted on charges of selling “new” cars that had previously been driven with their odometers disconnected.

In the credit markets, bond prices resumed an upward course, while the Treasury’s latest refunding auction received mixed reviews from analysts.

Corporate issues rose, and municipal issues were mixed.

Analysts said there was little trading in Treasury bonds Thursday, but it was again influenced by the dollar, which rose against most major foreign currencies.

The bond market recently has moved in tandem with the dollar as investors look for clues surrounding the nation’s inflation outlook.

Analysts said bond trading was held in check as investors awaited results of the Treasury’s third and final sale in its quarterly “mini-refunding.” A total of $7 billion in seven-year notes was sold out of bids totaling $18.9 billion during Thursday’s auction.

Yields on the seven-year notes rose to the highest level since January, 1986. The average yield was 8.10%, up from 7.04% at the last auction on March 26 and the highest level since January, 1986.

Analysts were split on the success of the auction, which traders had hoped would draw aggressive bidding by Japanese investors.

William V. Sullivan, senior vice president for money-market research for Dean Witter Reynolds, said it appeared that Japanese investors bought $1.75 billion in notes. “It’s not overwhelming interest, but good buying interest by Japan,” he said.

However, Robert Brusca, chief economist and senior vice president of the fixed-income division at Nikko Securities International, said “demand from Japan was less than it might be” and estimated that Japanese investors bought $1 billion to $1.5 billion in seven-year notes.

The federal funds rate, the interest on overnight loans between banks, traded at 6.75% up from 6.675% on Wednesday.