Rally Rolls On: Dow Up 16.5--Ninth Straight Gain
Wall Street stocks advanced to yet another post-crash peak today after the market reversed a steep early fall to finish higher for the ninth session in a row.
The Dow Jones industrial average, up every day so far this month, rose 16.50 points to close at 2,554.82. Since the rally began two weeks ago, the Dow has chalked up more than 110 points.
Traders attributed the market’s gains to a growing view that the economy will not weaken enough to cause more than a mild recession.
The market slumped earlier, knocking 26 points off the Dow at one stage, as brokers sifted through a stream of economic data that included a worrisome rise in June’s core wholesale inflation rate.
The market’s fatigue, natural after such a drawn-out advance, was evident in the shrinking margin between rising and declining issues in the broader market.
Advances outnumbered declines 16 to 13 in active New York Stock Exchange volume of about 184 million shares.
Bond prices sagged and long-term interest rates bounced higher in volatile trading today as the market reacted negatively to the latest economic news.
By late this morning, the Treasury’s benchmark 30-year bond was down 3/4 point, or about $7.50 per $1,000 face amount. Its yield, which moves in the opposite direction from its price, climbed to 8.11% from 8.03% late Thursday.
Initially, evidence of economic weakness furnished by government reports inspired buying enthusiasm in the bond market but the rally soon faded.
Normally the credit market would welcome signs that a slowdown in economic activity is being accompanied by a moderation in inflation.
But Maria F. Ramirez, an economist at Drexel Burnham Lambert Inc., said the market had built up its hopes ahead of the numbers and pushed up bond prices to very high levels. When the reports merely confirmed widely held views, traders decided to sell and collect profits.
“It’s not that the market is falling apart, it’s retrenching a little bit from very expensive levels,” said Ramirez.
In the secondary market for Treasury bonds, prices of short-term governments were down 1/32 point to 1/16 point, intermediate maturities were 1/16 point to 7/32 point lower and long-term issues were down 11/32 point to 3/4 point, according to Telerate Inc., the financial information service.
The Shearson Lehman Hutton daily Treasury bond index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, fell 1.88 to 1,189.22.
In corporate trading, industrials clung to small gains. 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, edged up 0.02 to 330.06.
Yields on three-month Treasury bills were unchanged, at 8.01%, and the discount also held steady at 7.76%. Yields on six-month bills rose to 7.99% as the discount rose 6 basis points to 7.59%. Yields on one-year bills remained at 7.82% as the discount stayed at 7.30%.
