Blue Chip Index Tops 2,000 Level : Dow Leaps 28; Airline Stocks Boost Market
The stock market shot up Friday as airline stocks found ready buyers, pushing the Dow Jones industrial index above the 2,000 level to a six-week high.
The Dow index, which relinquished the 2,000 level on Thursday, rose 28.18 points to close at 2,014.59.
For the holiday-shortened week, the index gained 31.33 points and has risen two consecutive weeks for the first time this year. Since Feb. 9, the index has gained more than 117 points.
Big Board volume came to 180.30 million shares, against 151.43 million on Thursday.
Advancing issues outnumbered declines by more than 2 to 1 on the New York Stock Exchange.
The market got a boost from higher airline stock prices following news that several companies will raise some of their discount fares, which means stronger profits, analysts said.
“This market is confounding a lot of people. It just does not want to go down quite yet,” said Rod Anderson, a trader with Shearson Lehman Hutton.
Traders said some of the buying came from traders who bought back shares they sold earlier this week. The short covering came amid expiration of several futures and options contracts, traders said.
Signs of Blue Chip Rally
Anderson said the day’s activity was partly a result of program trading. A number of futures and options contracts expired Friday “and everyone knows by now not to stand in the way of even a small expiration,” he added.
Buying of airlines stocks boosted the transportation index 19.28 to 815.54, its highest level since the October stock market crash. Some technical analysts believe that strength in the transport index foretells a rally in blue chip stocks.
NWA Inc., the parent of Northwest Airlines, rose 1 7/8 to 44, while AMR Corp., the parent of American Airlines, jumped 2 1/8 to 39 1/2. Delta Air Lines was up 3 to 48 and Allegis, the parent of United Airlines, advanced 1 5/8 to 73 5/8.
Fare hikes coupled with better-than-expected traffic growth in January lured investors. “Ultimately, it translates to higher earnings,” one analyst said.
In addition, several analysts at major investment firms have lately grown a bit more optimistic about the outlook for the market, citing signs of strength in the manufacturing sector of the economy.
Buying interest has been evident in some manufacturing stocks and many of the smaller “secondary” issues.
After a rally last week that carried over to Tuesday, the market flattened out for a couple of days. But no concerted selling pressure developed.
Other Strong Gainers
Texaco climbed 1 7/8 to 42 5/8. Financier T. Boone Pickens Jr. sought regulatory approval to buy a stake in the company, in which another prominent investor, Carl C. Icahn, already holds a 14.8% interest.
Other gainers among the blue chips included Ford Motor, up 2 1/2 at 44 3/4; Du Pont, up 1 3/4 at 85; Merck, up 2 1/2 at 161; Philip Morris, up 1 1/2 at 90 5/8, and American Telephone & Telegraph, up at 29 1/2.
Brockway jumped 11 to 57 1/2. Owens-Illinois said a federal court denied the Federal Trade Commission’s request to block its $60-a-share bid to acquire Brockway.
Phillips Petroleum rose 1 to 15. The company said it would have a $25-million gain in the current quarter from the settlement of a gas contract dispute.
On the downside, Pannill Knitting fell 1/2 to 5 1/2. The company reported fourth-quarter earnings of 53 cents a share, against operating profits of 50 cents in the last three months of 1986.
The Wilshire index of 5,000 equities closed at 2,571.425, up 25.817.
The NYSE’s composite index of all its listed common stocks added 1.82 to 146.96.
Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 202.85 million shares.
Standard & Poor’s index of 400 industrials rose 4.50 to 301.48, and S&P;’s 500-stock composite index was up 3.70 at 261.61.
The NASDAQ composite index for the over-the-counter market gained 1.49 to 357.12. At the American Stock Exchange, the market-value index closed at 280.16, up 2.24.
In foreign trading, prices dipped in dull trading on the London Stock Exchange. The Financial Times 100-stock index closed down 6.3 at 1,729.8.
Volume was a low 377.8 million shares, compared to 411.3 million on Thursday.
The Nikkei 225-share average closed at 24,773.41, up 98.05, on the Tokyo Stock Exchange.
