Stocks Rally to Highest Level Since ’87 Crash; Dow Flirts With 2,200

The stock market pushed ahead Thursday to its highest level since October, 1987, in a rally that briefly carried the Dow index above the 2,200 level but then faltered on nervousness ahead of the December jobs report.

The Dow Jones average of 30 industrials rose 12.86 to 2,190.54, surpassing its 1988 closing peak of 2,183.50 reached on Oct. 21.

On Oct. 16, 1987, just before taking a 508-point drop on “Black Monday,” the average stood at 2,246.74.

Advancing issues outnumbered declines by about 4 to 3 in New York Stock Exchange trading.

Volume on the floor of the Big Board came to 174.04 million shares, up from 149.70 million in the previous session.

The Labor Department is due to issue the December U.S. jobs report this morning and some investors fear a rise of more than 260,000 new jobs could prompt the Federal Reserve to tighten credit further.

There was talk in the market that the Fed may already have decided to raise its visible discount rate, the rate at which it lends short-term funds to commercial banks.

“With interest rates still going up, there will be a limit on the upside of the market,” said market strategist Rao Chalasani at Prescott, Ball & Turben Inc.

But the bond and stock markets have held their ground in the first few sessions of the new year, suggesting that investors have already taken the prospect of tighter credit into account.

Analysts also said stocks appeared to be benefiting from buying by investing institutions seeking to put some of their large cash reserves to work at the start of a new year.

They noted a substantial pickup in trading volume, which has been very sluggish of late.

Texaco Inc. rose on vague rumors that Laurence A. Tisch, an investor and the chief executive of CBS Inc., was building a stake in the oil company. A spokeswoman for CBS had no immediate comment on Tisch’s activity and Texaco also had no comment. Texaco, a takeover target of Carl C. Icahn, rose 1 1/2 to 53 1/2 in brisk trading.

In Tokyo, news about ailing Emperor Hirohito’s condition sent stock prices lower, ending a rally that began late last year. The Nikkei 225-share index closed off 59.87 at 30,183.79.

In London share prices finished stronger, boosted by speculative buying of leading British stocks and by successive rises on Wall Street. The Financial Times 100-share index closed up 6.5 points at 1,799.5.