Caution May Be in the Air, but Dow Flies in Face of It

The stock market closed strong for a second consecutive session on Monday, carrying along a rally despite lingering skepticism that the market can sustain its advance with inflation threatening.

The Dow Jones industrial index climbed 22.21 points to 2,037.30, adding to Friday’s gain of 27.69. It was the highest close since April 13, just before the market’s 101-point fall on disappointing trade figures. The NYSE’s composite index rose 1.18 to 148.21.

Advancing issues outnumbered declines by more than 3 to 2 in New York Stock Exchange-listed trading.

Big Board volume came to 156.95 million shares, against 152.52 million in the previous session.

The market lacked news and volume stayed light, as technical factors helped to sustain the recent rally.

“There were a few bargain hunters out there, but their appetite was not big as reflected in the volume,” analyst Michael Metz of Oppenheimer & Co. said.

Many traders remained sidelined awaiting today’s report on the gross national product, which could provide further clues as to whether the economy is becoming overheated. Wall Street economists are anticipating first-quarter GNP growth of 1.5% to 3%.

“People are basically confused,” said trader John Burnett of Donaldson Lufkin & Jenrette. “They are afraid of the volatility of the last few weeks and they are afraid of what the economic indicators will do to the market.”

As long as major uncertainties about the economy linger and volume remains light it will not take many buyers or many sellers to set the tone on a given day, he added.

Earlier Surprises

“The market is a meandering affair without real direction or real conviction right now,” Metz said.

Already this month, investors were surprised by stronger-than-expected wholesale and retail price data.

While the market has been whipsawed by economic uncertainty and inflation worries, corporate earnings have been a steady source of support. There have been few negative surprises reported, and many major companies, as expected, have announced strong gains.

“We are still in a short-term lift,” said A. G. Edwards’ analyst Alfred Goldman, “but it appears to be just a trading bounce with no sign of a meaningful advance.”

Rod Anderson, a trader with Shearson Lehman Hutton, said he expects the market to drift higher, assuming there is no surprise in the GNP figure.

Wall Streeters also are looking for a solid increase in the Commerce Department’s index of leading economic indicators for March, scheduled to be reported on Friday.

While the expected data would be positive for corporate earnings prospects, brokers say the figures could also put upward pressure on interest rates. Thus, they say, it is a tough call how the stock market will respond to the news.

Mobil rose 1 3/8 to 47 and Exxon was up 3/4 at 44 3/4. Both companies reported strong first-quarter earnings.

Auto issues were broadly higher as the industry posted a slight gain in mid-April domestic car sales. General Motors rose 1 to 74 5/8, Ford Motor gained 1 to 47 1/8 and Chrysler added 1/2 to 23 3/4.

Huge Volume in Issue

Other gainers among the blue chips included General Electric, up 7/8 at 41; Coca-Cola, up 2 at 39 7/8; Procter & Gamble, up 1 at 78 3/8, and Du Pont, up 1 3/4 at 84 3/8.

Southern Co. led the active list, up at 22 7/8 in a blizzard of block trades focused on the company’s impending quarterly dividend. Volume in the stock surpassed 28 million shares.

EMC Corp. was the day’s biggest percentage loser, tumbling 4 5/8 to 7 3/8. Late Friday, the company, a producer of computer products, said its first-quarter results fell short of expectations, with earnings per share of about three or four cents.

In the over-the-counter market, Major Video added 1/2 to 9 5/8. Blockbuster Entertainment plans to acquire Major Video through an exchange of stock.

Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 179.03 million shares.

Standard & Poor’s industrial index rose 2.91 to 305.83, and S&P;’s 500-stock composite index was up 2.32 at 262.46.

The NASDAQ composite index for the over-the-counter market gained 1.23 to 375.27. At the American Stock Exchange, the market-value index closed at 298.95, up 0.92.

In Japan, share prices rose across the board Monday and the Tokyo Stock Exchange closed at a record high.

The Nikkei 225-share index gained 155.08 points from Saturday’s closing to end the day at 27,213.45.

Meanwhile, share prices on the London Stock Exchange closed higher, boosted by a stronger start on Wall Street and a spate of late buying.

The Financial Times-Stock Exchange 100-share index closed up 6 points at 1,777.6.

Traders said the stronger Wall Street opening helped to raise most share prices from their midday doldrums.