Revived Dow Surges 26.07, Closes at Post-Crash High

The rally on Wall Street that began at the start of the year took on new life Tuesday, propelling the Dow index to a post-crash closing high in heavy trading and snapping a four-day retreat.

News that General Motors split its stock and raised its dividend started the revival, while a growing belief that President Bush will announce steps to trim the budget deficit when he addresses the nation Thursday night added to the overall enthusiasm on Wall Street.

The Dow Jones index of 30 industrials rose 26.07 to 2,347.14, its highest close since the October, 1987, crash. The last time the average closed higher was Oct. 15, 1987, two trading days before the crash, when it stood at 2,355.09.

GM, a component of the Dow index, soared 4 3/8 to 93 7/8 in heavy trading. The jump accounted for 6.25 points of the gain in the Dow.

Advancing issues outnumbered decliners by about 11 to 4 in nationwide trading of New York Stock Exchange-listed stocks, with Big Board volume rising to 217.26 million shares, up from Monday’s 150.98 million.

Another surging stock that lent support to the rest of the market was Union Carbide, which jumped 2 1/8 to 30 1/8 and was the most actively traded issue on the NYSE.

Carbide, often the subject of takeover rumors, was once again said to be a target, but analysts said a chunk of the buying Tuesday came from investors who wanted to take advantage of the chemical company’s upcoming dividend.

Jack Baker, an analyst with Shearson Lehman Hutton, said Wall Street had expected the Federal Reserve to raise its discount rate Tuesday, but when the anticipated hike failed to materialize, stocks rallied further.

Other factors contributing to the advance were Congress’ vote to kill a pay raise for House and Senate members and top Bush Administration officials, and positive reaction to President Bush’s announcement Monday of a bailout plan for the savings and loan industry.

“You couldn’t get much more positive news across the board,” Baker said.

Some of Wall Street’s recent gains have come from its own upward momentum as investors have jumped into the market to avoid missing the rally.

Such was the case again Tuesday, said Alfred E. Goldman, a market analyst with A. G. Edwards & Sons Inc. in St. Louis.

Tuesday’s developments “created all kinds of intestinal problems for those on the sidelines,” Goldman said.

He said the market appeared to have returned to an upward track after its pause, which included a 10-point drop in the Dow index Monday.

“The market was ripe for a good rally,” he said.

Big gainers Tuesday included Ford Motor, up 1 1/8 to 55 7/8, and IBM, up 1 to 127 5/8.

A big loser was Burlington Resources, which fell 2 3/4 to 46 3/8. On Monday, the stock soared 10 points after Pennzoil said it acquired 8% of the company’s shares.

The Wilshire index of 5,000 equities rose 30.094 to close at 2,947.239.

The NYSE’s composite index of all its listed common stocks rose 1.83 to 168.02.

Standard & Poor’s industrial index closed up 3.82 to 346.41; its 500-stock composite index rose 3.59 to 299.63.

The NASDAQ composite index was up 3.19 to 409.19; the American Stock Exchange index picked up 1.90 to close at 326.38.

In Tokyo, Japanese share prices firmed to a new record close Tuesday after falling from earlier levels on profit taking in surging sectors such as construction. The Nikkei 225-share index rose 51.90 to 31,880.65.

On the London Stock Exchange, shares recovered after Monday’s drop to end at a post-crash high. The Financial Times 100-share index closed at 2,072.8, up 28.5 from Monday’s close.