Market Resumes Its Rally; Optimism Spurs Dow 32.08
The stock market rallied today, resuming the month-long advance that has carried it to new highs since the crash of 1987.
The Dow Jones average of 30 industrials jumped 32.08 to 2,409.46, closing above 2,400 for the first time since it stood at 2,412.70 on Oct. 14, 1987.
For the week the average rose 72.40 points.
Advancing issues outnumbered declines by about 9 to 5 on the New York Stock Exchange, with 936 up, 517 down and 478 unchanged.
Big Board volume totaled 187.31 million shares, against 175.97 million in the previous session.
The NYSE’s composite index gained 1.58 to 172.88.
The market suffered a temporary setback Thursday when the West German central bank announced unexpected increases in its official interest rates.
That raised fears of downward pressure on the dollar and of possible further credit-tightening in this country.
By today, however, analysts said investors seemed to be taking the view that the Federal Reserve would wait a while longer to gauge the effects of the restrictive moves it has made over the past year or so.
Thus, observers noted, the possibility remained open in many minds that interest rates are close to or at a peak.
Bonds Bounce Back
Bond prices bounced back in early trading today, reflecting relief that major central banks took no immediate steps to match Thursday’s interest rate hikes in West Germany.
The Treasury’s benchmark 30-year bond was up 5/16 point, or nearly $3 per $1,000 face amount, at midday. Its yield, which moves in the opposite direction from its price, slipped to 8.98% from 9.01% late Thursday.
Bond prices fell sharply Thursday after the West German central bank unexpectedly raised two of its key lending rates.
The move suggested to some traders that world interest rates may be headed higher, a development that would depress bond prices.
But Sung Won Sohn, chief economist for Norwest Corp. in Minneapolis, said traders were reassured by today’s statement from Tatsuo Murayama, Japan’s finance minister, that he sees no reason for an increase in rates there.
“The comments served to calm the market,” Sohn said.
Secondary Market
In the secondary market for Treasury securities, prices of short-term governments rose 5/32 point, intermediate maturities rose 7/32 point and long-term issues were up as much as 11/32 point, according to 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 unavailable.
In corporate trading, industrials edged up. Moody’s investment grade corporate bond index, which measures total return on a portfolio of 80 corporate bonds with maturities of five years or longer, rose 0.31 to 301.71.
