Stocks Rally as Bonds Steady; Dow Up 23.60
Stock prices pulled out of last week’s slide with a rally in quiet trading Monday, aided by a steadier bond market.
The Dow Jones index of 30 industrials, down 70.15 last week, rebounded 23.60 to 2,662.95.
Volume on the New York Stock Exchange totaled 165.81 million shares, up from 156.33 million Friday.
Government bond prices stabilized, finishing slightly higher in the wake of last week’s decline. Corporate and municipal bond prices also advanced.
The Dow index finished August, after some wide swings, with a net gain of 90.88.
The market’s chief problem last week, analysts said, was a weak dollar in foreign exchange and rising interest rates.
Energy Stocks Gain
After rising at the outset, rates steadied in the government bond market Monday, finishing moderately lower for the session. And some stock traders evidently decided the time was ripe for catch-up buying after the market’s dramatic rise from last spring through mid-August.
Energy stocks were broadly higher on the news of renewed Persian Gulf fighting during the weekend in the war between Iran and Iraq. Exxon rose 1 5/8 to 99 5/8; Atlantic Richfield gained 1 1/8 to 94 7/8; Amoco advanced 2 to 84 1/2; Chevron climbed 1/2 to 58 1/2; Occidental Petroleum rose 5/8 to 38, and Mobil climbed 2 1/2 to 53 1/2.
Advancing issues outnumbered decliners by more than 5 to 3 in the daily tally on the NYSE, with 1,005 up, 588 down and 406 unchanged.
Meanwhile, the Treasury’s 30-year bond edged up 3/16 point, or nearly $2 for every $1,000 in face value. Its yield slipped to 9.16% from 9.19% on Friday.
Analysts said buying by professional traders who had earlier sold borrowed securities and were squaring those positions led to the gain in the government market.
Philip Braverman, chief economist for Irving Securities Inc., said traders are confused about the Federal Reserve Board’s intentions on credit policy.
The federal funds rate, the interest rate banks charge each other for overnight loans, was quoted at 6.81%, up from 6.75% late Friday.
Braverman said the relatively high level of the federal funds rate has led some traders to conclude that the Fed has encouraged higher interest rates.
