Stocks Reverse Course After Brady Testifies; Dow Rises 10.67
The stock market finished higher Tuesday in mostly sluggish trading, getting a last-minute boost from remarks by Treasury secretary-designate Nicholas F. Brady.
The statements touched off a late buying wave led by blue chip issues after stocks had traded slightly lower through most of the session.
The Dow Jones index of 30 industrials ended 10.67 points higher at 2,083.04. The closely watched blue chip indicator fell 10.31 points soon after the opening, recovered a bit and then stayed in a narrow range until shortly before the close.
In the broader market, advancing issues narrowly outnumbered declines in nationwide trading of New York Stock Exchange-listed stocks.
Brady, an investment banker nominated by President Reagan to replace former Treasury Secretary James A. Baker III, said at his Senate confirmation hearing that he expects the nation’s trade deficit to decline at a “surprisingly fast” pace during the next few years.
Analysts said Wall Street interpreted Brady’s comments as hinting that today’s scheduled government report on the merchandise trade report for July would be encouraging.
“I think the comment helped,” said Ralph Acampora, an analyst for Kidder, Peabody & Co.
Brady, who later was approved by the Senate Finance Committee for consideration by the full Senate, also said he sees no reason at this time for raising taxes. Brady’s nomination is widely expected to be approved.
Expectations Ease
Traders said many investors were sidelined awaiting several economic reports later in the week, particularly the U.S. trade data.
Monte Gordon, research director at Dreyfus Corp., said expectations of higher interest rates appear to have eased after recent reports that show a slowdown in the economy.
“But until you see cumulative evidence that the economy is slowing, you won’t get the market to rally,” he said.
Volume was also dampened, although less so than on Monday, by the observance of the Jewish New Year holiday.
NYSE volume of 162.49 million shares was significantly higher than Monday’s 114.88 million shares, but trading in utility Detroit Edison comprised 21.8 million of the total, while TW Services Inc. accounted for 9.1 million shares.
Analysts said the overall market was dragged down in the early going by negative news affecting shares of semiconductor companies, including National Semiconductor’s loss of $30.5 million in its first fiscal quarter.
“That sent the whole group into a tailspin,” said Hildegarde Zagorski, an analyst for Prudential-Bache Securities Inc.
Shares of National Semiconductor, one of the most actively traded companies, fell 5/8 to 8 1/2.
Traders said reports that Revlon Group Chairman Ronald O. Perelman had sold a 14% stake in TW Services stirred interest in several firms thought to be possible takeover targets. TW Services rose 1 5/8 to 20 5/8.
Monsanto Declines
On the negative side, Monsanto fell 4 to 74 5/8 and General Electric declined 1/8 to 42 3/8.
Kroger Co., which announced a possible restructuring after a takeover threat from the Haft family, jumped on speculation that a more generous offer may emerge. Kroger soared 11 3/4 to 51, with 7.1 million shares traded.
F. W. Woolworth Co., one of the 30 Dow industrials, rose 1 3/4 to 51 3/8 in sympathy with Kroger’s move. The Haft family filed to acquire up to $15 million of Woolworth’s stock in mid-March.
The NYSE composite index rose 0.52 to 151.15.
Standard & Poor’s industrial index rose 1.20 to 306.95, and S&P;’s 500-stock composite index was up 0.96 at 267.43.
In foreign trading, stock prices closed slightly higher in Tokyo after a fluctuating session that saw an initial spurt giving in to some profit taking.
The Nikkei 225-share index added 37.42, or 0.13%, to 27,794.16. It gained 109.64 Monday.
Stock prices moved also moved higher in London, as the market was buoyed by developments in the oil sector. The Financial Times 100-share index closed up 11.7 at 1,756.3.
