Dow Ekes Out Gain Despite Texaco’s Drop
Momentum from last week’s impressive rally lifted the Dow index Monday to a fifth-consecutive post-crash closing high in active trading.
The Dow Jones index of 30 industrials edged up 1.25 to 2,324.11, its highest close since the market crash in October, 1987.
The closely watched blue chip indicator was restrained to some extent by a $4 drop in shares of Texaco Inc., one of its components. But the broader market rose convincingly.
Advancing issues edged declines by about 3 to 2 in nationwide trading of New York Stock Exchange-listed stocks.
The blue chip index had been depressed much of the day, weighed down by lower Treasury bond prices, but equities analysts said the market was underpinned by demand from portfolio managers who missed out on the previous week’s rally and are afraid to miss out on a further rise.
“We’ve seen a fantastic rally already, but not withstanding that, I think we’ve got some more on the upside,” said Dan Hays, investment strategist with Wheat First Securities.
“The market is actually pretty amazing,” said Bill Raftery, an analyst at Smith Barney, Harris Upham & Co. “There’s no profit taking going on; they’re hanging in there.”
Big Board volume totaled 167.83 million shares, down sharply from 254.87 million in Friday’s session, which saw the heaviest trading in seven months.
“The market has acted pretty well considering we’re coming off the 87-point move last week,” Hays said. “But investors have every excuse not to buy (stocks) because of short-term rates being high,” he added.
Texaco Agreement
Analysts described the advance as a continuation of Friday’s surge, when a wave of institutional buying lifted the Dow Jones index over 2,300 for the first time since the October, 1987, collapse.
On Monday, the drop in Texaco shares dampened the Dow’s rise. Investors were disappointed by news late Sunday that Texaco’s management had struck a truce with its biggest shareholder and longtime nemesis, financier Carl C. Icahn, who said he would not try to buy the oil giant or wrest control away from its board.
Texaco, the second most actively traded issue on the Big Board, tumbled 4 1/4 to close at 50 1/4.
The Commerce Department reported that Americans’ personal income rose 0.9% in December after a slight decrease during November. Analysts said the report stirred some inflationary concern in the bond market but was largely shrugged off by Wall Street.
Analysts said the market got a bit of a boost from the robust dollar and falling prices of oil and gold, although stocks were fueled mostly by their own steam.
“Nobody cares about anything except the market itself,” said Michael Metz, an analyst at Oppenheimer & Co.
The dollar’s recent strong showing has revived foreign investors’ interest in the stock market, and they and others are poised to jump into the action in the near future, Metz suggested.
“There are buyers waiting in the wings,” he said. “There’s plenty of money still waiting to get in.”
AT&T; Down $1
Among other actively traded issues on the NYSE, volume leader RJR Nabisco jumped 2 to finish at 98. The investment firm Kohlberg Kravis Roberts & Co. said it agreed to divest some duplicate product lines that it would acquire in its $24.53-billion buyout of RJR Nabisco under a tentative agreement with the staff of the Federal Trade Commission.
Union Carbide rose 5/8 to 28 5/8; IBM jumped 1 7/8 to 128 3/4; Ford Motor climbed 1 1/8 to 53 5/8, and Polaroid was up 5/8 at 40 5/8.
AT&T; fell 1 to 30 1/2; Phillips Petroleum slipped 1/8 to 20 1/2; Illinois Central dropped 1 1/4 to 21 1/8, and Southern Co. was unchanged at 23 7/8.
Nationwide, consolidated volume in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 202.66 million shares.
The Wilshire index of 5,000 equities finished the day at 2,896.291, up 9.598 from Friday’s close.
The NYSE’s composite index of all its listed common stocks was up 0.58 at 165.36.
Standard & Poor’s industrial index increased 1.41 to 340.96, and S&P;’s 500-stock composite index rose 1.17 to 294.99.
The NASDAQ composite index rose 1.26 to 399.22; the American Stock Exchange index closed at 321.88, up 0.31.
In foreign trading, stock prices closed lower on the Tokyo Stock Exchange in thin trading, as the market caught its breath after last week’s sharp gains. The Nikkei 225-share index fell 111.57, or 0.35%, to close at 31,567.50.
However, the London stock market shot up for the second straight trading day Monday on speculation that British interest rates may have peaked. The Financial Times 100-share index closed 37 points higher at 2,042.9.
