Dow Jumps 27.20, Reaches Highest Level in 20 Months

Wall Street today advanced to its highest level in nearly 20 months, climbing to heights it has not seen since shortly before the October, 1987 stock market crash.

The Dow Jones industrial average rose 27.20 points to 2,517.83. That was its highest close since Oct. 7, 1987, when it finished at 2,551.08 before the string of losses that culminated in the 508-point plunge on Oct. 19, 1987.

Advancing issues exceeded declines by more than 5 to 2 in heavy New York Stock Exchange trading. Big Board volume totaled 229.14 million shares, against 223.16 million in the previous session.

Market analysts said Wall Street took heart from a government report of a lower-than-expected rise in May employment, suggesting that the economy’s growth is slowing and that the Federal Reserve may ease interest rates.

“The markets are acting very well. Bonds have continued to run and are close to their highs. We’ve seen a fair amount of activity from overseas (investors),” said Tom Callahan, a Yamaichi Securities senior vice president.

Bond prices surged higher in early trading today, boosted by a long-awaited unemployment report that further indicated economic growth is slowing.

The Treasury’s bellwether 30-year bond, which slipped 1/32 point on Thursday, had jumped 1 13/32 points, or more than $13.75 per $1,000 face amount at midday. Its yield, which moves in the opposite direction from its price, plunged to 8.47% from Thursday’s 8.60%.

The Labor Department’s widely anticipated unemployment report “accentuated rumors all week that the Fed is going to ease,” said Robert Chandross, vice president and chief economist for Lloyds Bank PLC’s North America head office in New York.

Fed Move Predicted

“The question is whether the market is expecting more than it’s going to get,” he added.

Chandross suggested that before lowering the discount rate, the Fed is more likely to allow the federal funds rate--the interest on overnight loans between banks--to trade lower and become more aggressive in supplying reserves.

In the secondary market for Treasury securities, prices of short-term governments rose 17/32 points to 3/4 points, intermediate maturities were up 31/32 points to 1 3/8 points, and long-term issues were up 15/16 point, according to Telerate Inc., the financial information service.