Late-Inning Rally Sends Dow Up 2.31 : 2,183.50 at Close Is the Third Post-Crash High for the Week
Wall Street’s Dow index struggled to record a post-crash high Friday after a euphoric surge in the final minutes of the session pulled the index out of the minus column.
Thursday’s gain was also built on a final-hour rally.
The Dow Jones index of 30 industrials rose 2.31 to 2,183.50, setting a new 1988 high for the third time this week. For the week, the index chalked up a net gain of 50.32 points.
Advancing issues slightly outnumbered declines in nationwide trading of New York Stock Exchange-listed stocks, with 757 up, 695 down and 524 unchanged.
Volume on the floor of the Big Board came to 195.41 million shares, against 189.58 million in the previous session.
‘Extraordinary Week’
Takeover situations and the fate of oil prices held traders’ attention throughout the session. U.S. oil prices fell as dealers tried to figure out if eight OPEC ministers meeting in Madrid would be able to work out an accord that would help mop up excess oil on world markets.
Traders said increased interest in takeover issues, sparked by Thursday’s news of a possible $17-billion buyout of RJR Nabisco Inc. by its management and an $11.5-billion offer for Kraft Inc. announced Monday, inflated the volume of trades.
“We had an extraordinary week,” said market strategist Rao Chalasani of Prescott Ball & Turben, referring to news of the two takeovers. “On a short-term basis they created confidence in the market.”
Suresh Bhirud, strategist at Oppenheimer & Co., said “the downside is very limited, but I am not sure the market will just run up because of takeovers.
“If fundamentals turn bullish, then I can see the market running up a couple of hundred points,” Bhirud added.
However, he also said the dollar has been weakening, “and that presents a problem for bonds as well as stocks.” Foreign investors tend to unload U.S. denominated investments if they are worried about a declining dollar.
No Support From Bonds
Larry Wachtel of Prudential Bache Securities Inc. said he does not see short-term rates going up and continues to find certain stock groups such as chemicals and papers attractive.
Brokers also said the market in general was weighed down earlier in the day by a disappointing earnings report from Digital Equipment, a prominent technology company.
Digital, which said sales of its high-end computer systems were below expectations, dropped 4 1/8 to 87 in active trading.
In addition, interest rates rose moderately in credit market activity, leaving stocks without support from the bond market.
Tokyo share prices gradually trimmed their early gains through the day to close marginally higher Friday. The Nikkei 225-share index rose a scant 10.87 points to 27,401.42.
On the London Stock Exchange, the Financial Times 100-share average closed up 1.8 points at 1,864.3.
