Dow Up 12.92 as Late Surge Lifts Market
Blue chip issues led the stock market higher Monday on the strength of a late flurry of buying near the close of a sluggish session.
The Dow Jones index of 30 industrials, down about 77 points over the past two weeks, rose 12.92 to 2,687.50.
Advancing issues slightly outnumbered declines in nationwide trading of New York Stock Exchange-listed stocks, with 751 up, 693 down and 512 unchanged.
Big Board volume was 136.94 million shares, down from 234.87 million Friday, when activity was increased by the quarterly “triple witching hour” involving a group of expiring stock-index options and futures.
Nationwide, consolidated volume in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 166.73 million shares.
Analysts said traders were reluctant to make any big commitments either way while they kept a watchful eye on the market for high-yield junk bonds.
The market for those securities, commonly used to finance takeovers and buyouts, has been rocked lately by problems at Campeau Corp., which used debt to finance a coast-to-coast U.S. retailing empire.
If the junk bond market suffers a lasting loss of investor confidence, brokers say, stocks might undergo a difficult reappraisal by traders no longer ready or able to chase after takeover news and rumors.
“We may be witnessing the beginnings of a completely different type of stock market from the one we’ve known for four or five years,” said analyst Greg Smith at Prudential-Bache Securities.
Analysts also cited widespread talk that stocks were due for a “correction,” or short-term pullback, after their sharp rise over the first eight months of the year.
Gainers among the blue chips included American Telephone & Telegraph, up 7/8 at 41 3/8; McDonald’s, up 3/4 at 30 1/2; Chevron, up 1 1/8 at 59; General Electric, up 3/8 at 57 5/8, and Procter & Gamble, up 2 1/2 at 121 1/2.
In Tokyo, the Nikkei index of 225 selected issues rose 70.66 to 34,472.54. It gained 114.94 Thursday, the final trading day last week because Friday was a national holiday.
In London, the Financial Times-Stock Exchange 100-share index closed at a session high of 2,373.8, up 7.3. Volume was 310.2 million shares, down sharply from 725.9 million shares on Friday.
Credit
Bond prices dipped in thin trading as many investors sat out the session and waited for today’s scheduled release of the government’s consumer price report.
The Treasury’s bellwether 30-year bond fell 1/8 point, or $1.25 for every $1,000 in face value. Its yield rose to 8.09% from 8.07% late Friday.
Analysts described Monday’s session as quiet as traders were reluctant to significantly adjust their holdings in advance of the August consumer price report, a major inflation indicator.
If the report indicates that inflation is moderating, bond prices could rise, because the Federal Reserve is believed to be more likely to relax credit and allow interest rates to fall if inflation slows. Bond prices rise when rates come down.
In the secondary market for Treasury securities, prices of short-term governments were 3/32 point to 5/32 point lower, intermediate maturities ranged from 1/16 point to 3/32 point lower and long-term issues were off 3/32 point to 1/8 point, according to Telerate Inc., a financial information service.
The federal funds rate, the interest on overnight loans between banks, was quoted at 8.875%, down from 9.625% late Friday.
Currency
The dollar dropped again in the aftermath of the panicky decline at the end of last week, hurt by traders’ fears of central bank selling and the uncertain effect of an impending meeting of finance ministers.
Gold prices also fell following gains overseas. Republic National Bank quoted gold at $360.70 an ounce as of 4 p.m. EDT, compared to $362.50 late Friday.
In Tokyo, the dollar closed at 146.43 Japanese yen, up 0.58 yen. In London, the dollar was quoted at 145.85 yen. By the time trading concluded in New York, the dollar fetched 145.93 yen, down from 146.35 late Friday.
In London, one British pound cost $1.5695 late Monday, more expensive than the $1.5390 rate late Friday. Later in New York, the pound fetched $1.5710, more expensive than its $1.5660 rate late Friday.
On the New York Commodity Exchange, gold bullion for current delivery settled at $361.70 an ounce, down $2.20 from Friday.
Commodities
Cocoa futures prices fell to new life-of-contract lows on New York’s Coffee, Sugar & Cocoa Exchange following the international cocoa cartel’s failure to salvage a derailed price-support scheme.
On other markets, grain and soybean futures fell sharply; livestock and meat futures were mixed; precious metals were lower, and energy futures were mixed.
Cocoa futures settled $54 to $67 lower.
