Dow Advances 32.89 for Its Second Big Run-Up in a Row

The stock market ran up a sharp gain for the second straight session Wednesday as fears of rising interest rates and inflation continued to abate on Wall Street.

The Dow Jones index of 30 industrials climbed 32.89 to 2,064.01, bringing its gain over the past two sessions to 107.57.

Advancing issues outnumbered declines by nearly 4 to 1 in nationwide trading of New York Stock Exchange-listed stocks, with 1,290 up, 330 down and 368 unchanged.

Volume on the Big Board totaled 234.56 million shares, against 247.61 million Tuesday. Nationwide, consolidated volume in NYSE-listed issues, including trading at regional exchanges and on the over-the-counter market, totaled 268.48 million shares.

“We’ve broken out of the doldrums,” a Wall Street broker said. “Tuesday’s rise has given more and more confidence to investors. Large capitalization stocks are doing well; drugs are doing well, and people are starting to take notice.”

Interest rates fell for the second straight day in the credit markets, reducing yields on long-term Treasury bonds to the 9.1% range.

Analysts said revived enthusiasm for both stocks and bonds was prompted in part by talk that the Federal Reserve was eager to avoid raising its discount rate, despite its other moves of late to tighten credit.

Aside from that rationale, many Wall Streeters openly expressed surprise at the market’s sudden show of strength Tuesday.

Some economists who scrutinize the links between markets were disturbed by Wall Street’s big gain, in part because it defied a logical pattern that had developed between stocks, bonds and commodity prices.

Doesn’t ‘Ring True’

In that relationship, when commodity prices rise, bonds fall over the consequent fear of inflation and depress stocks as well. But commodity prices jumped Tuesday--while stocks and bonds also rose.

“On balance, what’s going on with the stock and bond markets does not ring true,” said Robert Brusca, chief economist of Nikko Securities Co. International in New York. “The trap door is going to open up again and suck everybody down.”

Wednesday’s government report that the index of leading economic indicators rose 0.2% in April was in line with expectations and thus had no great direct effect on the market.

However, brokers said it helped paint a picture of moderate economic growth that might be sustained without aggravating inflation or upward pressure on interest rates.

Stock traders said the substantial volume signaled that institutions, with their large hoards of cash, are back in the market after a long absence.

“We’re unquestionably seeing foreign participation,” added Thomas Ryan, head of securities trading at Kidder Peabody. But brokers said retail buyers, chastened by the October crash, are still holding back.

“I think they’re still scared and shellshocked,” said Trude Latimer, a trader with Josephthal.

Brokerage Stocks Up

Gainers among the blue chips Wednesday included Merck, up 1 7/8 at 55; International Business Machines, up 5/8 at 113 1/8; American Telephone & Telegraph, up 5/8 at 27 3/4; Ford Motor, up 5/8 at 48 3/4, and Eastman Kodak, up 1 at 43.

Securities industry stocks were broadly higher, benefiting from increased volume of stock trading as well as rising securities prices. Morgan Stanley added 4 to 66 1/2; Merrill Lynch rose 1/2 to 24 5/8; Primerica climbed 1 1/8 to 25 1/2, and Charles Schwab advanced 3/8 to 7.

Harnischfeger Industries, which reported higher earnings for the fiscal quarter ended April 30, jumped 2 3/8 to 23.

Varo Inc. rose 1 7/8 to 22 7/8. The company, which is opposing a takeover bid from a British firm, said it expected to be acquired by another party in a friendly deal by year-end.

The NYSE’s composite index of all its listed common stocks gained 2.31 to 150.34.

Standard & Poor’s industrial index rose 5.37 to 308.04, and S&P;’s 500-stock composite index was up 4.53 at 266.69.

The NASDAQ composite index gained 4.47 to 374.81; the American Stock Exchange index closed at 298.29, up 4.10.

Large blocks of 10,000 or more shares traded on the NYSE totaled 4,813, compared to 3,275.

The Wilshire index of 5,000 equities closed at 2,640.464, up 37.858 or 1.45% from Tuesday.

In Japan, the Nikkei 225-share index closed at 27,703.91, up 287.21, on the Tokyo Stock Exchange.

Stock prices in London ended higher. The Financial Times 100-share index rose 23.1 to 1,805.7. Volume was a modest 440.3 million shares.