Dow Surges Out of Slump, Rises 22.68
Stock prices pulled out of a week-long slump today with a rally led by blue chips.
The Dow Jones average of 30 industrials climbed 22.68 to 2,303.93.
Advancing issues outnumbered declines by about 8 to 5 on the New York Stock Exchange, with 888 up, 550 down and 513 unchanged.
Big Board volume totaled 154.22 million shares, against 149.56 million in the previous session.
The NYSE’s composite index gained 1.27 to 165.21.
Interest rates, which have been climbing of late, pulled back a bit in the credit markets today.
Analysts said that evidently encouraged traders to do some selective buying of stocks, especially in the blue-chip sector and in issues involved in takeover rumors and speculation.
The Federal Reserve Board’s report of a 0.3% increase in industrial production last monthdid not do much to aggravate the inflation worries that have been dogging both the stock and bond markets because the figure came in slightly below what most analysts had been expecting.
Bond prices advanced in early trading today, buoyed by a change in perceptions about the near-term prospects for interest rates.
The Treasury’s closely watched 30-year bond was up 3/8 point, or $3.75 for every $1,000 in face value, around midday. Its yield, which moves inversely to its price, had declined to 9.07% from 9.11% late Tuesday.
Analysts said bond prices got a lift from a statement today by a West German monetary official dismissing the notion that any discount rate increase by the U.S. Federal Reserve would be matched by West Germany’s Bundesbank.
“People are not expecting this coordinated rate effort,” said Elizabeth Reiners, a vice president at Dean Witter Reynolds Inc.
The discount rate is the interest the Fed charges on loans to financial institutions. A hike in the key rate tends to drive bond prices lower.
In the secondary market for Treasury bonds, prices of short-term government issues had edged up 1/32 point to 1/16 point, intermediate maturities had risen 3/32 point to 3/16 point and long-term issues had gained 1/4 point, according to figures provided by the Telerate Inc. financial information service.
The movement of a point is equivalent to a change of $10 in the price of a bond with a $1,000 face value.
The Shearson Lehman Hutton daily Treasury bond index, which measures price movements on outstanding Treasury issues with maturities of a year or longer, was up 1.42 at 1,125.87.
In corporate trading, industrials declined. Moody’s investment grade corporate bond index, which measures price movements on 80 corporate bonds with maturities of five years or longer, slipped 0.23 to 296.84.
Yields on three-month Treasury bills fell to 8.8% as the discount declined 5 basis points to 8.49%. Yields on six-month bills slipped to 9.07% as the discount lost 4 basis points to 8.57%. Yields on one-year bills declined to 9.26% as the discount fell 3 basis points to 8.55%.
A basis point is one-hundredth of a percentage point. The yield is the annualized return on an investment in a Treasury bill. The discount is the percentage that bills are selling below the face value, which is paid at maturity.
The federal funds rate, the interest on overnight loans between banks, was quoted at 9 3/8%, up from 9 1/4% late Tuesday.
