Blue Chips in Favor as Dow Climbs 6.63
The stock market edged higher Wednesday in slow trading but a slight pullback in the dollar erased bigger gains made early in the session, with most of the buying interest concentrated on blue chip issues.
“We’re seeing very selective buying,” said Charles Jensen, analyst with MKI Securities.
The Dow Jones average of 30 industrials increased 6.63 to 1,848.97, after rising about 9 points Tuesday.
But in the broader market, about the same number of stocks fell and rose in value on the New York Stock Exchange, with 756 issues down, 745 up and 456 unchanged.
The Wilshire index of 5,000 equities closed at 2,280.852, up 9.291 from Tuesday.
Volume on the Big Board totaled 148.89 million shares, slightly lower than Tuesday’s 149.87.
The market got off to a shaky start, with the Dow industrial average falling about 11 points shortly after the opening bell in reaction to the dollar’s initial weakness in foreign exchange.
As the dollar improved overseas, stock prices also recovered, although most of the gains were in blue chips. The dollar later fell back in U.S. trading.
Traders said computerized program trading contributed to a late afternoon rally that pushed up the Dow industrial average around 20 points, but program trades also helped erase most of the gains minutes before the session ended.
Year-End Blues
Program trading is a strategy in which traders use computers to play off differences between futures options and other instruments and their underlying “baskets” of stocks.
Jensen said many investors traded secondary stocks for “more conservative issues,” such as blue chips, as they neared the end of another tax year.
“The broad market is suffering from the year-end blues and the profit taking or tax selling that goes on this time of year,” he said.
Still, Alfred Goldman, a technical analyst with A. G. Edwards & Sons, noted that many stock traders stayed on the sidelines. “Nobody . . . wants to dive in and make a commitment, and that’s showing in the light volume as well as the drifting level of the market.”
Among actively traded blue chip stocks, International Business Machines was down 3/4 to 110 1/2; American Telephone and Telegraph was up 1/8 to 27 1/8; Exxon was up 3/4 at 37 3/4, and Eastman Kodak was up 1/8 to 45 3/4.
E. F. Hutton fell to 27 3/8 in active trading. The securities firm reportedly reached a tentative agreement to be acquired by Shearson Lehman Bros. for about $1 billion.
