Shuttle Propels Stocks; Dow Rally Adds 33.78
The stock market put together a broad rally Thursday, showing signs of life after the stalemate of the past few weeks.
The Dow Jones index of 30 industrial stocks rose 33.78 to 2,119.31 on New York Stock Exchange volume of 155.79 million shares, up from 113.72 million the day before and easily its highest of the week.
The rally was broadly based, with advancing issues leading declines by about 5 to 2 in nationwide trading of NYSE-listed stocks.
The average share price on the Big Board rose 37 cents.
Analysts said there was no single development in the news to explain the rally.
Some traders said the market received a boost from the successful launching of the U.S. space shuttle Discovery on Thursday morning.
“I think we probably had a space shuttle market today,” said Thom Brown, managing director of Rutherford, Brown & Catherwood. “The launch certainly contributed a bit to the optimistic outlook among investors.”
However, some analysts said, it appeared that some traders were bidding for stocks simply because the market hasn’t sold off lately despite a long list of worries and uncertainties.
Among those problems are the approaching first anniversary of Black Monday on Oct. 19, which is presumed to be casting a pall over the market.
In addition, investors are said to be reluctant to commit themselves before they can get a clearer idea of where government economic policy is headed after the Presidential election.
“The tone of the market was much better today. It was good on a technical basis, and it made a good move based on expectations that interest rates would soften,” said Eugene Peroni, a market analyst with Janney Montgomery Scott.
The Federal Reserve entered the government bond market Thursday, injecting new reserves by buying securities. By injecting new cash into the banking system, the Fed nudges down interest rates.
Peroni said the Fed moves helped fuel expectations that interest rates may ease. “They (the Fed) seem to be throwing a little more money at the system. Nothing dramatic, but certainly enough to enhance traders’ perspective that short-term rates have peaked,” Peroni said.
But traders also said that trading was relatively thin, demonstrating that investors remain hesitant about putting their money into equities.
The shuttle flight briefly lifted Morton Thiokol’s shares, which rose 1 to 41 3/8 just after the critical part of the launch. But Thiokol, which helped make the space shuttle’s rockets, lost most of its gains by the end of the session to close at 40 3/8, up .
Shares of Williams Corp. rose 1 to 32 3/4 on rumors that Carl C. Icahn or other investors were building stakes in the company and might attempt a takeover.
Takeover rumors also boosted shares in K mart Corp., one of the most heavily traded issues on the NYSE, which closed up 1 at 38 3/4. The retailer has recently been rumored as the target of leveraged buyout firm Kohlberg Kravis Roberts & Co. K mart declined to comment.
Gainers in the blue chip sector included: Coca-Cola, up 7/8 at 44; International Business Machines, up 1 1/2 at 115 3/8; General Electric, up 1/2 to 43 3/4, and Philip Morris, up 1 5/8 to 97 5/8.
Fischbach Corp. jumped 7 to 20 1/8. A group of investors said it was making a $25-a-share offer for the company.
Share prices fell on the Tokyo Stock Exchange. The Nikkei 225-share index fell 51.88 to 27,700.13.
Stocks surged late in the session on the London Stock Exchange.
The Financial Times 100-share index ended 16.5 points higher at 1,829.