A drop in interest rates helped the stock market stage a broad advance Thursday, recouping Wednesday’s losses.
The Dow Jones average of 30 industrials, down 15.35 on Wednesday, climbed 22.67 to 2,265.71.
Advancing issues outnumbered declines by more than 2 to 1 in nationwide trading of New York Stock Exchange issues, with Big Board volume retreating to 161.98 million shares from Wednesday’s 177.21 million.
A steady showing by the dollar against leading foreign currencies helped push bond prices higher in the credit markets.
Worries Seem to Be Easing
That, in turn, seemed to encourage buying in the stock market.
Analysts said the worries about increasing inflation and Federal Reserve credit tightening that swept through the markets last week apparently were easing.
Fed Chairman Alan Greenspan said he expects the increase in the consumer price index for February, which will be announced later this month, to be smaller than the 0.6% gain reported for January.
On the Tokyo Stock Exchange, stock prices closed mostly higher Thursday in a combination of bargain hunting and profit taking. The key Nikkei 225-share index added 109.43, to close at 32,073.73.
Share prices also closed higher on the London Stock Exchange, boosted by relief that the West German central bank, the Bundesbank, left its leading interest rates unchanged and by a strong performance on Wall Street. The Financial Times 100-share index closed 18.4 points higher at 2,039.7.
The dollar strengthened Thursday against most major currencies in thin trading after turning mixed overseas.
Gold prices declined. Republic National Bank of New York quoted a late bid of $383.50 an ounce, down 50 cents from late Wednesday.
Traders attributed the dollar’s rise largely to technical factors, although they said the currency got some support from the West Germany’s decision to keep interest rates unchanged.
European traders said the dollar came under pressure against the British pound after the Bank of England intervened to support the weak currency by selling dollars for sterling. The pound had fallen because of unexpectedly bad figures on Britain’s trade performance during January and persistent doubts about Britain’s overall economic health.
The pound closed in London at $1.7270, higher than Wednesday’s late $1.7243. Later, in New York, sterling fetched $1.7125, down from $1.72325.
In Tokyo, where trading ends before Europe’s business day begins, the dollar closed at 128.07 Japanese yen, up from 127.68 yen. The dollar traded at 127.90 yen in London and at 128.435 yen in New York, up from 128.225 yen late Wednesday.
Other late dollar rates in New York, compared to Wednesday’s levels, included: 1.8474 West German marks, up from 1.83675; 1.5824 Swiss francs, up from 1.5690; 1.19485 Canadian dollars, down from 1.19875; 6.2880 French francs, up from 6.2495, and 1,361.33 Italian lire, up from 1,354.25.
Bond prices turned sharply higher Thursday on the strength of the dollar and on Greenspan’s remarks on inflation.
The Treasury’s benchmark 30-year bond rose 23/32 point, or about $7.20 per $1,000 face amount, while its yield sank to 9.12% from 9.17% late Wednesday.
The federal funds rate, the interest on overnight loans between banks, was quoted at 9.813%, up from 9.75% late Wednesday.
A mere hint of Soviet interest in buying sent the jittery soybean futures market into a powerful rally Thursday on the Chicago Board of Trade and sparked some of the most active trading so far this year.
Corn and oat futures also advanced, but wheat futures retreated after Wednesday’s run-up on rumors, which were confirmed Thursday, that the Soviet Union had purchased 485,000 metric tons of U.S. wheat at subsidized prices.
On other markets Thursday, energy futures surged, livestock and meat advanced, copper futures gained and precious metals were narrowly mixed.
Soybeans settled 11.50 to 20.50 cents higher, with the contract for delivery in March at $7.675 a bushel; wheat was 2 to 3.75 cents lower, with March at $4.3625 a bushel; corn was 1 cent to 3.75 cents higher, with March at $2.755 a bushel; oats were 2.25 to 6 cents higher, with March at $2.0875 a bushel.
Unconfirmed rumors of Soviet plans to purchase U.S. corn and possibly some soybean meal touched off the late rally on the Board of Trade, analysts said.
The reaction was especially pronounced in the soybean market, which has become increasingly sensitive to demand factors as soybean supplies have tightened--a function of last summer’s drought.
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