Wall St. Posts Best Day Since Crash; Dow Closes at 2,071.62, a 48.41 Gain
Wall Street trading surged Monday to its best closing since the October stock market crash, adding 48 points to its blue chip index in the second-heaviest trading day of the year.
The Dow Jones industrial average, which rose only 8 points last week, ended 48.41 points higher at 2,071.62.
The rise comfortably eclipsed the market’s previous best post-crash close of 2,051.89, reached on Jan. 7 after a four-day New Year’s rally. Last Thursday, the market raced above 2,070 but then ran into a wave of late selling that left it 22 points down by the closing bell.
“This was an important psychological accomplishment, crossing the 2,051 mark,” said market analyst Alan Ackerman of Gruntal & Co.
“At this point, the momentum seems to be significant enough to create a good base and deflect any disappointing news that may come our way,” he added.
Takeover news, an early bond market rally and dividend-related buying were the main catalysts, traders said. Buying in the final 30 minutes of trading was triggered by arbitrage-related computer programs, traders said. These involve trading large volumes of stock index futures and options along with stocks.
“There is surely uncertainty about the economy and interest rates,” said one trader, “but I think investors are coming back because they feel most of the market’s excesses have been worked off.”
A growing sense that the economy is faring better than forecast just a few weeks ago has provided a backdrop of support for stocks, traders said.
Awaiting Commerce Report
They said that remarks by Henry Kaufman, chief economist at Salomon Bros., that the U.S. economy will not slide into a recession this year caused some mild enthusiasm. There is a risk of recession in 1989 but not in 1988, Kaufman said.
One concern facing the market is the report due today from the Commerce Department on the index of leading economic indicators for January.
Analysts generally expect the figure to show a decline. But the firm of Smith Barney, Harris Upham & Co. said the 0.2% drop originally reported for December might be revised to show a gain.
That would mean that the index would no longer have a string of three consecutive monthly declines, a phenomenon that is traditionally regarded as a potential recession warning.
The Dow Jones industrials finished February with a gain of 113.40 points. The average stands some 333 points above its close of 1,738.74 on Oct. 19.
Volume Heavy
Observers said enthusiasm for stocks was fueled by continuing brisk takeover activity.
On the takeover scene, Roper Corp. jumped 10 3/4 to 36 7/8. The company agreed to be acquired by Whirlpool Corp. for $37.50 a share.
Homestake Mining climbed 3 1/2 to 18. Mesa Limited Partnership made a $20-a-share offer for the company.
Stop & Shop picked up 7/8 to 43 1/2. The company, fighting a hostile bid by Dart Group, reached agreement on a buyout at $44 a share by a group organized by Kohlberg, Kravis, Roberts & Co.
Point-plus gainers among the blue chips included General Motors, up 3 1/8 at 72; Merck, up 4 5/8 at 165 3/8; International Business Machines, up 1 3/4 at 117 1/2; General Electric, up 1 7/8 at 45 1/2, and International Paper, up 1 5/8 at 44 3/8.
Advancing issues outnumbered declines by about 7 to 2 on the New York Stock Exchange, with 1,255 up, 351 down and 374 unchanged.
Big Board volume reached 236.05 million shares, against 191.09 million in the previous session. The NYSE’s composite index gained 2.76 to 150.46.
Traders said that a large chunk of the day’s volume could be attributed to various investment strategies to capture large dividends. Of the 10 most actively traded stocks, the top six amassed such high volume because of the dividend-related buying, traders said.
Large blocks of 10,000 or more shares traded on the NYSE totaled 3,625, compared to 2,746 on Friday.
The Wilshire index of 5,000 equities closed at 2,635.733, up 44.949 from Friday’s close.
Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 265.09 million shares.
Standard & Poor’s index of 400 industrials rose 6.80 to 309.43, and S&P;’s 500-stock composite index was up 5.36 at 267.82.
The NASDAQ composite index for the over-the-counter market gained 3.55 to 366.95. At the American Stock Exchange, the market-value index closed at 288.46, up 4.14.
In foreign trading, Tokyo share prices closed lower Monday in active trading due to profit taking, snapping a 13-day winning streak that saw the main market index advance more than 1,600 points.
The Nikkei 225-share index lost 42.06 to close at 25,242.81 after hitting a morning low of 25,127.71.
In London, the Financial Times 100-share index closed up 2.3 at 1,768.8.
