Dow Jumps 50 as ‘Witching Hour’ Spurs Heavy Trading

The stock market rose sharply Friday, reviving its year-end rally in activity intensified by the quarterly “witching hour” involving stock index futures and options.

The Dow Jones index of 30 industrials climbed 50.90 to 1,975.30, closing out the week with a gain of 108.26. That surpassed the record weekly point rise of 100.30 set the week before.

Advancing issues outnumbered decliners by more than 3 to 1 on the New York Stock Exchange. Big Board volume totaled 276.22 million shares, against 191.78 million in the previous session.

The day began amid general expectations of heavy trading and unpredictable swings in stock prices, with December options and futures on stock indexes approaching expiration.

In a process adopted earlier this year with the aim of smoothing out the witching hour, some of the contracts were settled on the basis of Friday’s opening stock prices, and others at the close.

Reports from the NYSE floor before the opening and again before the close showed a preponderance of buy orders for most stocks used by program traders in index arbitrage transactions along with the options and futures.

While the witching hour muddied the overall picture, analysts said investors seemed to respond favorably to a rally in the dollar, a drop in interest rates and an assertion by Alan Greenspan, Federal Reserve chairman, that a recently reported jump in the nation’s trade deficit was an “aberration” that is likely to be reversed in the next monthly figures.

Elsewhere in the economic news, the Labor Department reported that the consumer price index rose 0.3% in November, in line with most advance estimates.

Gainers among the blue chips included General Electric, up 7/8 at 45 7/8, and International Business Machines, up 1 3/4 at 117.

Texaco gained 2 1/2 to 38 1/2, and Pennzoil added 4 1/8 to 79 3/8 amid anticipation of an agreement to settle their long legal battle.

On the downside, Central Hudson Gas fell 7/8 to 18 7/8. The company reduced its dividend, citing the disallowance of part of its investment in a nuclear power plant.

The NYSE’s composite index of all its listed common stocks gained 3.13 to 139.15.

Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 304.52 million shares. The NASDAQ composite index added 7.40 to 326.91. The American Stock Exchange market value index closed at 256.10, up 4.92.

London’s key Financial Times-Stock Exchange index was up 10.8 at 1,717. Stocks slipped in Tokyo, however; the Nikkei 225-share index eased 72.86 at 22,826.97.