FINANCIAL MARKETS : Dow Advances 31.33 as Dollar-Stabilizing Pact Gives Market a Boost
Wall Street scored a big gain Monday, recovering more from its late summer slump after a weekend dollar-stabilizing accord gave investors more confidence in the prospects for a stocks rebound.
The Dow Jones index of 30 industrials, up more than 40 at its midday peak, closed with a 31.33 advance at 2,601.50.
Volume on the New York Stock Exchange stepped up to 188.07 million shares from 137.95 million on Friday.
A. C. Moore, analyst at Argus Research Corp., said investors were heartened by weekend news from a meeting of the Group of Seven industrialized countries in Washington.
There had been conjecture last week that the group might seek a lower level for the dollar in foreign exchange.
Instead, it reaffirmed its commitment to an agreement made last February to try to keep the dollar stable, apparently near its present levels.
Moore said that development got a warm reception from investors at a time when the feeling had spread that the pullback in stock prices over the past month had just about run its course.
“The market pulled out of a steep down trend that began at the August peak and continued to last Tuesday’s rally,” said Bear, Stearns & Co. analyst Jack Solomon.
He cautioned that the market correction might not quite be over.
“The market isn’t quite ready for sustaining its forward thrust,” he said. However, he continues to view the market’s longer-term outlook positively.
He said stocks continue “to benefit from takeover action and offers, which showed that stocks aren’t as overpriced as some analysts said.”
The lack of movement in the dollar in reaction to the currency accord kept investors wary, however, causing some paring of bigger early gains, analysts noted. A stronger dollar makes U.S. securities more attractive to foreigners and also dampens inflation.
The credit markets seemed more skeptical, posting little change for the day. However, analysts said a steady showing by bonds was good enough to satisfy stock traders, given the pummeling the bond market has taken of late.
Salomon Inc. rose 2 3/4 to 34 3/4 in active trading. The firm bought out Minerals & Resources Corp. as its largest stockholder and announced plans to receive a new infusion of capital from Berkshire Hathaway Inc., whose chairman, Warren E. Buffett, is widely respected as a shrewd investor.
Among stocks of other investment banking firms, First Boston gained 1 3/8 to 42 3/8 and Morgan Stanley rose 1 to 77 3/4.
IBM was a notable laggard among the blue chips, down 3 to 152 3/4. Analysts cited continued worries about the recent arbitration decision in its dispute with Fujitsu.
Pacific Telesis led the NYSE active list, rising 1 to 33. Southern California Edison was second, gaining to 32 3/8.
Advancing issues outnumbered declines by about 5 to 3 in the overall tally on the Big Board.
Earlier in Tokyo, stock prices closed sharply higher following news that the Group of Seven had decided to maintain their currencies within the same parameters agreed to last February. The Nikei 225-share market index gained 324.55 to close at 25,837.34.
Meanwhile, the London Financial Times stock exchange index ended 25.5 higher at 2,368.1. The widely watched 30-share Financial Times ordinary index closed at 1,850.9, up 19.3.
