Stocks Extend Year-End Rally; Dow Up 21.97
The stock market climbed to a two-month high Monday, extending its year-end rally despite worries about the outlook for interest rates.
The Dow Jones index of 30 industrials rose 21.97 to 2,172.68, not far short of the 1988 closing high of 2,183.50 it reached Oct. 21.
Advancing issues outnumbered declines by about 7 to 5 in nationwide trading of New York Stock Exchange-listed stocks, with 841 up, 598 down and 538 unchanged.
Big Board volume came to 162.25 million shares, down from 196.48 million Friday, when the total was swollen by a “triple-witching hour” involving expiring stock index futures and options.
Nationwide, consolidated volume in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 196.36 million shares.
Tighter Credit
Analysts said the market benefited from talk of more takeovers and buyouts, and from buying by program traders engaged in multiple strategies.
At the same time, market watchers said the Federal Reserve appeared likely to continue tightening credit to restrain economic growth that keeps exceeding most people’s expectations.
Consumer spending was generally described as strong going into the last week of the Christmas selling season.
The Fed has not raised its discount rate since Aug. 9, when it increased the charge it imposes on loans to private financial institutions from 6% to 6.5%.
But brokers said the Fed has taken other measures to tighten credit conditions as recently as last week and may be planning a new discount-rate increase in the first few weeks of 1989.
“While consumers spread holiday cheer, the Fed is casting itself as Scrooge,” said Donald Straszheim, chief economist at Merrill Lynch, in a weekend bulletin to the firm’s clients.
Standard Brands Paint Co. rose 3/4 to 15 3/4 on volume of 156,500 shares, several times the stock’s average daily volume of about 29,000 shares. A Standard Brands official said he was unaware of a reason for the heavy trading, although analysts said the stock tends to be volatile.
Pillsbury gained 3 1/8 to 65 3/8. The company ended a long battle by agreeing to Grand Metropolitan’s offer to acquire it for $66 a share.
Tiger International picked up 1/2 to 19 7/8 on top of a 2 1/2-point gain Friday, when the company agreed to be taken over by Federal Express for $20.875 a share.
Thin Trading
General Motors was up 2 at 87 3/4. The company said it was considering buying some of its Class H stock from the Howard Hughes Medical Institute.
Trading on the Tokyo Stock Exchange was thin Monday in the absence of buying incentives. The Nikkei index shed 66.63, or 0.23%, to 29,470.08. It closed down 169.04 on Friday.
In London, prices fell slightly in a lackluster session on the London Stock Exchange.
The Financial Times-Stock Exchange 100-stock index fell 3.2, or 0.18%, to 1770.5.
