Dow Up a Fraction as Rally Fades
The stock market settled for some small and spotty gains Wednesday after an early advance faded.
The Dow Jones index of 30 industrials, up more than 10 points in the early going, closed with a 0.53 gain at 2,065.79.
Advancing issues outnumbered declines by about 5 to 4 in nationwide trading of New York Stock Exchange-listed issues, with Big Board volume rising to 139.59 million shares from Tuesday’s 122.25 million.
“The market has a much better tone. It was a flat market today, but I think it’ll build,” said John Brooks, Marshall & Co. managing director.
Analysts have been predicting a pullback since Friday to allow time for investors to cash in their gains and some were surprised that the market managed to move higher at all.
“It looks like we can extend the rally a little further,” said James Boham, market analyst with Merrill Lynch & Co. “Perhaps we’ll get further confirmation (of a slowing economy) as more economic data is released in September,” he added.
Sentiment has gradually turned more positive, and some analysts have even turned strongly optimistic.
Oil Prices Help
“This (market action) is very much the way it should be,” said Don Hays, investment strategist with Wheat First Securities. “We’re expecting the market to take off again tomorrow or the next day and move to 2,130 (on the Dow index) in the next three to five days.”
The key factor, Hays said, will be the direction of interest rates. Helping on that front is a steep decline in oil prices over the past two days. The decline, while damaging to oil shares, buoyed transportation stocks.
Stock market bulls hope that more economic data in the weeks ahead will reinforce the belief that growth has slowed, reducing upward pressure on inflation and interest rates.
Recent weakness in oil prices kept the pressure on energy issues. Atlantic Richfield dropped 1 to 80, Mobil dipped 1/8 to 42 5/8, Amoco fell 1 to 73, Exxon eased 7/8 to 45 3/4 and Chevron lost to 44.
In the oil field service and drilling group, Schlumberger fell 1 3/8 to 31 1/8 and Baker Hughes was down 1/8 at 13 1/8.
Airline stocks, which had been strong lately on prospects for lower fuel prices, turned in a mixed showing. AMR rose 3/8 to 45, Delta Air Lines was unchanged at 47 3/4 and UAL slipped 1/2 to 90 1/2.
MCA climbed 2 to 46 1/2 amid rumors and speculation that the company was about to announce plans for the sale of some assets or some other transaction.
American President Cos. fell 1 5/8 to 31 3/4. Itel Corp., which holds the equivalent of a 12.5% stake in American President, said it has no plans to increase its position in the near future.
Foreign Markets Mixed
The Wilshire index of 5,000 equities closed up 3.496 at 2,646.085.
The NYSE’s composite index of all its listed common stocks edged up 0.18 to 150.38.
Standard & Poor’s industrial index rose 0.10 to 304.72, and S&P;’s 500-stock composite index was up 0.28 at 265.87.
The NASDAQ composite index for the over-the-counter market added 0.63 to 377.96. At the American Stock Exchange, the market-value index closed at 296.36, down 0.23.
On the Tokyo Stock Exchange, the Nikkei 225-share index closed up 183.50 at 27,504.01.
Prices settled lower on the London Stock Exchange in the continued absence of substantive news on which to trade. At the close, the Financial Times 100-stock index was down 11.9 points at 1,756.1.
