Dow Rises 18.90 in Moderate Trading on Hopes for Lower Interest Rates

From Times Wire Services

Stock prices moved broadly higher Thursday, regaining lost territory as hopes for lower interest rates outweighed worries about slower economic growth this quarter.

The Dow Jones index of 30 industrials rose 18.90 to 1,930.04.

Gaining issues outpaced losers by about 13 to 5 on the New York Stock Exchange, with 1,077 issues higher, 413 lower and 459 unchanged.

Big Board volume totaled 166.43 million shares, against 176.36 million in the previous session.

Analysts described trading as lackluster to moderately active.

The market is still digesting the impact of Wednesday's U.S. fourth-quarter gross national product report that showed brisk 4.2% growth. But the report also revealed a buildup in inventories that could slow economic growth.

Traders said investors were at least encouraged by the prospect that slower growth would translate into easier interest rates, reducing the pain for all.

Strength in the bond market also bolstered prices. In a repetition of Wednesday's session, new highs on the bond market that spilled over into rising prices for stocks.

"The whole theme that has evolved this week is: 'Rates are coming down,' said Ralph Bloch, an analyst at the Raymond James & Associates securities firm in St. Petersburg, Fla.

"I'm among the handful of people who say the only thing to concentrate on is the direction of interest rates, and to hell with the rest of the statistics," said Trude Latimer, analyst at Josephthal & Co.

Traders said investors are pulled in two directions, discouraged by the possibility of slower growth, yet bolstered by hopes of easier interest rates. The day's volume was light, they said, because many investors have taken to the sidelines in an attempt to reassess the economy's direction.

"People don't know how to feel about the economy, and that is keeping them away," said Bill Lord, a trader at Shearson Lehman Hutton Inc.

But Latimer said investors who believe interest rates are likely to head downward appeared to have more influence on market action.

Eugene Peroni Jr., analyst at Janney Montgomery Scott in Philadelphia, said the Federal Reserve "will remain at least accommodating," supplying enough reserves to the banking system to keep interest rates from rising.

Hopes that the Fed will indeed take an accommodating stance and keep interest rates in line helped interest-rate sensitive stocks such as utilities, which are sought after for their yield and which themselves borrow a lot of money.

Other analysts, however, said the stock market was still subject to easy swings, even though it had been affected by the developments in bonds.

Newton Zinder, an analyst at Shearson's securities firm, described trading as "very uncertain," noting that the day's rally had all but evaporated in early afternoon, only to recover again, "because there was no follow-through" of that decline.

Heavy buying in some sectors also helped lead the market, Zinder said.

For example, airlines did especially well, "though there's no specific reason why," he said.

Delta was up 3, at 43; AMR Corp. was up 2 at 36 3/4, and Allegis was up 1, at 70.

Tenneco, which will pay a dividend soon, led the Big Board's most-active list at 40, down 1/8.

Among takeover-related issues, Federated Department Stores was up 1 at 51. On Monday, Canadian developer Campeau Corp. bid $4.2 billion for the company.

Monsanto was up 1/8 at 83 5/8. On Wednesday its NutraSweet Co. subsidiary announced what it called the first completely natural fat substitute.

IBM was up 1 at 113 3/4, after the company announced new board members.

Santa Fe Southern Pacific was down 1 3/4 at 45 3/4.

Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the OTC market, totaled 191.58 million shares. The NYSE index was up 1.99 at 142.22.

Standard & Poor's index of 400 industrials rose 4.39 to 289.75, and S&P;'s 500-stock composite index was up 3.91 at 253.29.

At the American Stock Exchange, the market value index rose 1.52 to 267.13. The NASDAQ composite index for the over-the-counter market closed at 342.36, up 2.56.

The 100-share Financial Times-Stock Exchange index closed 18.7 points up at 1,783.9.

On the Tokyo Stock Exchange, stocks closed mixed with financial and retail issues showing some strength. The Nikkei index of 225 selected issues gained 251.34 points to close at 23,587.25.

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