Dow Gains 25 as Volume Hits Record for Year : Market Benefits From Buying by Professionals
The stock market swept ahead Thursday in an advance that carried the Dow Jones index near 2,300 for the first time since the crash of 1987.
Trading volume set its fastest pace of the year as buying by professional money managers overwhelmed a round of selling early in the session.
The Dow Jones index of 30 industrials climbed 25.18 to 2,291.07, bringing its gain over the past three sessions to 72.68 points. The last time the index closed higher was Oct. 15, 1987, when it stood at 2,355.09.
Advancing issues outnumbered declines by about 9 to 5 in nationwide trading of New York Stock Exchange-listed stocks.
Volume on the floor of the Big Board reached 212.25 million shares, up from 183.61 million Wednesday and the heaviest total since a 216.39 million-share day on Oct. 7, 1988.
Analysts said the market drew some support from talk in Washington of a possible move toward restoring a capital gains tax break. “I think the capital gains tax is too high,” Chairman Alan Greenspan of the Federal Reserve Board told the Senate Finance Committee.
Brokers also said the market benefited from catch-up buying by professionals and money managers unhappy about missing out on the market’s gains since late last fall.
A brief early decline was prompted by an upswing in credit-market interest rates. However, brokers said, the pullback attracted buyers who apparently had been waiting for an opportune moment to buy.
Japanese stocks closed lower in light trading after a three-day rally to a record high brought in profit-takers. The Nikkei 225-share index closed down 55.98 points at 31,511.81.
Share prices rose sharply on the London Stock Exchange as continued institutional buying combined with a lack of sellers in certain issues to produce sudden rises among the leading shares. The Financial Times 100-share index closed up 20.8 points at 1959.8.
CREDIT
Prices of government securities ended with minor gains, recovering from an early selloff triggered by an unexpectedly strong economic report.
Corporate and municipal issues were unchanged to slightly lower.
The credit market’s benchmark issue, the 30-year Treasury bond, rose about 3/16 point, or about $2 for every $1,000 in face value. Its yield, which moves in the opposite direction from its price, fell to 8.79% from 8.82% late Wednesday.
At one point early in the session, some long-term Treasury bonds were down nearly 1/2 point, or $5 per $1,000 in face amount.
Marshall B. Front, an executive vice president at the Chicago investment and mutual fund management firm Stein Roe & Farnham, said although the price gains were minor, they demonstrated the market’s resilience.
The federal funds rate, the interest on overnight loans between banks, was quoted late in the day at 9.188%, down from 9.375% late Wednesday.
CURRENCY
Foreign exchange traders pushed the dollar slightly higher Thursday, again testing central banks’ commitment to holding the U.S. currency in check.
Dealers said there was no firm reason for the dollar’s climb, although there was a brief rally after a report that U.S. durable goods orders surged 6.4% in December. Many had expected a 0.3% rise.
The dollar retreated somewhat when details showed that some of the gains were from large defense and transportation orders.
The Federal Reserve sold some dollars for West German marks late in New York’s trading session, dealers said.
In Tokyo, the dollar fell to 127.52 Japanese yen from 127.65 late Wednesday. In London, the dollar traded at 128.15 yen. Later, in New York, the dollar rose to 128.32 yen from 127.43 late Wednesday.
In London, the British pound rose to $1.7730 from $1.7710 late Wednesday. In New York, sterling fell to $1.7673 from $1.7708.
Other late rates for the dollar in New York, compared to late Wednesday’s rates, included: 1.8475 West German marks, up from 1.8405; 1.5705 Swiss francs, up from 1.5630; 1.1850 Canadian dollars, up from 1.1841; 6.2833 French francs, up from 6.2553, and 1,351.6 Italian lire, up from 1,345.5.
