Dow Rises 12.98; 3rd Straight Gain : Stocks Ride Up With Bonds as Interest Rate Worries Ease
Stock prices advanced on Wall Street for a third straight day Wednesday as strength in the bond market allayed some trader concerns about rising interest rates.
The Dow Jones index of 30 industrial stocks rose 12.98 to 2,114.51, giving the well-known barometer a gain of nearly 40 points over the past three sessions.
Advancing issues outnumbered declines by a better than 2 to 1 margin in nationwide trading of New York Stock Exchange-listed stocks, with Big Board volume rising to 157.81 million shares from 127.42 million in the previous session.
Wednesday’s activity mirrored trading in the previous session, when the market drifted for the first half of the day and then picked up steam in the afternoon.
Analysts said gains in bond prices--and corresponding declines in yields--eased some fears on Wall Street that interest rates will continue to rise.
By late afternoon, the Treasury’s bellwether 30-year bond had picked up $6 per $1,000 in face value, while its yield slipped to 9.06% from late Tuesday’s 9.13%.
The Fed report said the economy is expanding at a slower rate in most parts of the country than it has in recent months, with business sluggish in some areas. It also said wage hikes have been moderate, despite a tight job market.
“The Fed statement has encouraged the belief that perhaps the Fed will not make a move to tighten monetary policy,” said market analyst Charles Jensen of MKI Securities.
No Sign of Confidence
But the level of activity indicated many investors are still hesitant.
“The volume is better but not at levels where one would think there’s a lot of confidence or aggressive buying,” said Robert Colby, a market analyst with Smith Barney, Harris Upham & Co.
Many traders were keeping a low profile in advance of Friday’s scheduled release of unemployment figures for November, believing that the Fed will raise the discount rate if the jobless figure remains low. In October, the unemployment rate was 5.3%.
Despite traders’ hesitancy, analysts said they detected a better tone in the market over the past few days.
Colby, noting that stocks managed a small gain on Monday after major banks raised their prime lending rates, said: “The market acted well in the face of bad news.”
Analysts have attributed some of this week’s gains to Wall Street’s oversold condition.
“We’ve had far too much bearishness, and pessimism sows the seeds for its own reversal,” Colby said.
Michael Metz, an analyst with Oppenheimer & Co., said activity in takeover stocks spilled over to other issues.
“People are looking for the next game to play,” he said.
The company involved in the biggest takeover battle in history, RJR Nabisco, was the most actively traded stock on the NYSE. RJR Nabisco’s stock rose 2 1/8 to 93 as the company’s management offered to pay more than $24.3 billion, or $108 a share, to buy the food and tobacco giant.
Major Gainers
The stock of another takeover target, Pillsbury, was up 1 3/8 to 59 1/4 after the food company’s board again rejected a $5.23-billion, or $60-per-share, offer from Grand Metropolitan PLC.
Other big gainers included Warner Lambert, up 2 3/8 to 75 3/8; Dow Chemical, up 1 1/4 to 85 3/8, and Digital Equipment, up 1 1/8 to 93 5/8.
Declining issues included IBM, down 7/8 to 118 1/2, and Xerox, off 3/8 at 55.
The Wilshire index of 5,000 equities closed at 2,690.027, up 25.691.
The NYSE composite index of all its listed common stocks picked up 1.47 to 153.90.
Standard & Poor’s industrial index rose 3.16 to 315.12, and S&P;’s 500-stock composite index picked up 2.79 to finish at 273.70.
The NASDAQ composite index for the over-the-counter market was up 3.30 to 371.45.
At the American Stock Exchange, the market-value index rose 2.16 to 294.36.
In foreign trading, stock prices rose strongly in Tokyo on heavy buying of large capital issues Wednesday, with late gains in financial shares taking the most watched index to a new closing high. The 225-share Nikkei index rose 260.60 points, or 0.89%, to 29,578.90, exceeding the record close of 29,430.12 set Tuesday last week.
Share prices also strengthened on the London Stock Exchange, with the Financial Times 100-share index ending the day up 5.5 points at 1,792.4, the lowest point of the session.
