Wall Street Optimists Spur Dow to 29.88 Gain
The stock market rose sharply today amid mounting hopes for evidence of reduced inflationary pressures.
The Dow Jones average of 30 industrials climbed 29.88 to 2,418.99.
Advancing issues outnumbered declines by more than 2 to 1 on the New York Stock Exchange, with 1,005 up, 464 down and 484 unchanged.
Big Board volume totaled 191.17 million shares, against 146.09 million in the previous session.
The NYSE’s composite index rose 1.31 to 173.06.
Analysts expect a fresh sign of slowing economic growth when the government reports Friday on the index of leading economic indicators for March.
The index, designed to detect future economic trends, is expected to show a decline of about 0.6% after falling 0.3% in February.
That would provide some additional encouragement for the Federal Reserve not to tighten credit in the immediate future.
Wall Streeters generally agree that the Fed has lately been following a neutral credit policy, watching to see the effects of a yearlong bout of credit tightening intended to keep inflation in check.
Bond prices spurted ahead in brisk trading early today because of buying inspired by optimism about the inflation and interest rate outlook.
The credit market’s bellwether bond, the 30-year Treasury issue, moved ahead by 7/16 point, or nearly $5 for every $1,000 face amount. Its yield fell to 8.91% from 8.95% late Wednesday.
Ward McCarthy, chief financial economist at Merrill Lynch Capital Markets, said an accumulation of factors triggered bond buying, including weakness in oil prices, which helped relieve anxieties over the inflationary consequences of the recent strength in the energy markets.
Bond traders also took comfort from a New York Times article saying the Federal Reserve has stopped tightening credit because the central bank already may have slowed economic growth significantly. Concerned about a pickup in inflation, the Fed had been pushing up interest rates earlier this year.
“I don’t think the article was telling anyone anything they didn’t know,” said McCarthy.
He said, however, that the timing of its publication might have convinced previously doubtful bond traders that now is a good time to buy because interest rates, which move in the opposite direction from bond prices, probably won’t go higher.
Secondary Market
In the secondary market for Treasury securities, prices of short-term governments rose by 1/4 point to 11/32 point and intermediates and long-term maturities were up 3/8 point to 13/32 point, according to the Telerate Inc. financial information service.
The movement of a point equals a change of $10 in the price of a bond with a $1,000 face value.
Corporate issues also were higher. 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 0.47 to 303.48.
