Dow Up 11.18, Boosted by Decline in Interest Rates
Stock prices advanced broadly today, aided by new declines in interest rates.
The Dow Jones average of 30 industrials rose 11.18 to 2,493.77, cutting its loss for the week to 7.33 points.
Advancing issues outnumbered declines by about 5 to 2 on the New York Stock Exchange, with 1,025 up, 412 down and 513 unchanged.
Big Board volume totaled 143.12 million shares, against 154.47 million in the previous session.
The NYSE’s composite index gained 1.26 to 179.31.
Activity tapered off through the day as many traders got an early start on the long Memorial Day weekend. The markets will be closed on Monday.
Interest rates fell in the credit markets. Prices of long-term government bonds rose more than $5 for each $1,000 in face value, reducing their yields to the 8.6%-8.65% range.
Analysts said stocks benefited from expectations that the recent downturn in rates might have further to go, with encouragement from the Federal Reserve.
The economy has showed signs of slowing lately, as Fed policy makers have intended. Furthermore, some observers think the central bank might want to ease credit in order to slow the recent sharp rise of the dollar in foreign exchange.
Bond prices were higher in early trading today, rebounding from an earlier decline on the strength of the rising dollar.
The Treasury’s key 30-year bond was up 17/32 point, or about $5.30 for every $1,000 in face value, at around midday. Its yield, which moves in the opposite direction to its price, had declined to 8.62% from 8.67% late Thursday.
Early trading was thin.
Analysts said bond prices were knocked down earlier today by the government report on consumer spending, which fueled the market’s fears of inflation. Bond prices recovered later, however, as the dollar strengthened against major foreign currencies, analysts said.
“Basically, it looks like we’re just shrugging off some of the economic data recently and focusing on the foreign exchange market,” said Kevin Flanagan, a money market economist at Dean Witter Reynolds Inc.
Secondary Market
In the secondary market for Treasury securities, prices of short-term government issues were up 1/16 point to 3/32 point, intermediate maturities had gained 3/16 point to 5/16 point and long-term issues had jumped about 1/2 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, had risen 2.40 to 1,150.95.
In corporate trading, industrial bonds were lower. 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, had slipped 0.16 to 313.42.
