FINANCIAL MARKETS : Stocks : Dow Rises 29.88; Hopes About Inflation Cited
The stock market rallied Thursday in buying ascribed to hopes for favorable news on the inflation outlook.
The Dow Jones index of 30 industrials climbed 29.88 points to 2,418.99, a new high since the crash in October, 1987. Its previous recovery peak had been 2,409.46 last Friday.
Advancing issues outnumbered declines by more than 2 to 1 in nationwide trading of New York Stock Exchange-listed stocks, with 1,021 up, 485 down and 459 unchanged.
Volume on the floor of the Big Board came to 191.17 million shares, up from 146.09 million in the previous session. Nationwide, consolidated volume in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 226.18 million shares.
Analysts expect a fresh sign of slowing economic growth when the government reports today on the index of leading economic indicators for March.
The index, which is 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 year-long bout of credit-tightening intended to keep inflation in check.
Buying by professional traders engaged in computer program strategies involving options and futures on stock indexes helped fuel the market’s advance, brokers said.
Boeing, which received a big order for planes from United Airlines on Wednesday, rose 1 3/4 to 75 3/4 in active trading.
United Technologies gained 3 1/2 to 52 3/8 and General Electric picked up 5/8 to 48 5/8. A GE venture and United Technologies’ Pratt & Whitney subsidiary are to produce engines for the aircraft.
All three stocks are components of the Dow index. Other gainers among the blue chips included Philip Morris, up 2 1/2 at 127 3/4; McDonald’s, up 1 1/8 at 54 3/4; Procter & Gamble, up 3/8 at 95, and American Telephone & Telegraph, up 3/4 at 35 1/8.
In Tokyo, the stock index rose to a record close on speculation that U.S. interest rates may have finally peaked, brokers said. That would cause the dollar to ease against the yen and take pressure off Japan to raise its rates, they said.
But the gain for the index was small because many traders, especially those from institutions, were reluctant to buy ahead of a series of Japanese holidays next week.
The 225-share Nikkei index rose 65.90 points to 33,500.83, the second closing record in a row.
In London, stocks closed just below the day’s highs, helped by a strong start on Wall Street. The Financial Times 100-share index closed up 22.3 points at 2,115.7.
Credit
Bond prices advanced broadly Thursday as traders appeared to feel that the mounting evidence of a slowdown in economic growth has taken the pressure off interest rates.
The credit market’s bellwether bond, the 30-year Treasury issue, rose 1/2 point, or $5 for every $1,000 face amount. Its yield fell to 8.90% from 8.95% late Wednesday.
In the secondary market for Treasury securities, prices of short-term governments increased 5/16 point, intermediates rose 7/16 point and long-term maturities climbed as much as 9/16 point, according to Telerate Inc., a 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.
Yields on three-month Treasury bills declined to 8.65% as the discount dropped 11 basis points to 8.36%. Yields on six-month bills fell to 8.95% as the discount fell 12 basis points to 8.46%. Yields on one-year bills fell to 9.08% as the discount lost 11 basis point to 8.41%.
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, paid at maturity.
The federal funds rate, the interest on overnight loans between banks, traded at 9.8125%, compared to 9.75% late Wednesday.
Dollar
The dollar finished at varied levels against key foreign currencies in light U.S. trading Thursday after a similar performance overseas.
Gold prices declined in the United States following modest rises on foreign precious metals markets. Republic National Bank of New York quoted an ounce of gold at $382.30 as of 4 p.m. EDT, down from Wednesday’s late bid of $384.50.
Foreign exchange dealers around the world sold dollars on news that West German Chancellor Helmut Kohl had confirmed his government would repeal the country’s 10% withholding tax on interest income.
The repeal, scheduled for July 1, would make the West German mark and mark-denominated holdings more attractive.
The dollar began its trading day in Tokyo by rising to 132.05 Japanese yen from 131.47 yen at Wednesday’s close. Later, in London, the dollar edged up further to 132.15 yen. The dollar closed at 132.12 yen in later New York trading, up from 132.105 on Wednesday.
In London, one British pound cost $1.6905, cheaper for buyers than $1.6932 late Wednesday. Sterling rose to $1.691 in New York from $1.6900 late Wednesday.
Other late dollar rates in New York, compared to late Wednesday’s levels, included: 1.8760 West German marks, down from 1.8793; 1.65855 Swiss francs, up from 1.6580; 1.19195 Canadian dollars, up from 1.18955; 6.3475 French francs, down from 6.3595, and 1,374.25 Italian lire, down from 1,377.375.
Other late dollar rates in Europe, compared to late Wednesday’s levels, included: 1.8756 West German marks, down from 1.8770; 1.6585 Swiss francs, up from 1.6555; 6.3455 French francs, up from 6.3395; 2.1150 Dutch guilders, unchanged; 1,373.50 Italian lire, down from 1,374.00, and 1.1940 Canadian dollars, up from 1.1900.
Gold bullion prices gave a mixed performance.
On the Commodity Exchange in New York, gold bullion for current delivery fell to $383.30 an ounce, $2 lower than Wednesday’s settlement.
Gold rose in Zurich, Switzerland, to $384.25 from $383.50. In London, the metal also was quoted at $384.25, unchanged.
Earlier, in Hong Kong, gold closed at $385.71, up from $385.59.
Silver bullion prices also pulled back. On the New York Comex, silver bullion for current delivery settled at $5.645 an ounce, down from $5.763 at Wednesday’s close. Silver bullion dipped in London to $5.76 from $5.77.
Commodities
Silver futures prices dropped sharply on New York’s Commodity Exchange on selling prompted by indications of ample supplies.
On other markets, gasoline and crude oil prices fell, cattle lost ground while hog prices rallied, and wheat and soybean futures slipped while corn rose.
Gold prices fell in sympathy with silver and on signs of selling by gold dealers, Platt said.
Petroleum futures settled mixed on the New York Mercantile Exchange on position-evening ahead of the expiration today of the gasoline and heating oil contracts. Traders also were nervous over the possibility that members of the Organization of Petroleum Exporting Countries may increase their crude oil production later this year.
West Texas Intermediate crude oil settled 6 cents to 27 cents lower, with June at $20.92 a barrel; heating oil was 0.33 cent to 0.88 cent higher, with May at 51.86 cents a gallon, and unleaded gasoline was 0.06 cent to 0.60 cent lower, with June at 72.27 cents a gallon.
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