The stock market staged a broad-based rally today, triggered by news of a $3-billion takeover offer for Great Northern Nekoosa Corp.
The Dow Jones average of 30 industrials rose 41.60 points to finish at 2,645.08.
Advancing issues outnumbered declines by about 13 to 5 on the New York Stock Exchange, with 1,120 issues up, 435 down and 407 unchanged.
Big Board volume totaled 176.10 million shares, against 126.63 million in Monday’s session.
The NYSE’s composite index rose 2.65 to 188.24.
At the American Stock Exchange, the market value index closed at 370.58, up 1.71.
The momentum began at the opening bell on news that Georgia Pacific Corp. had offered to acquire the Norwalk, Conn.-based paper company, and it continued throughout the session.
Wall Street analysts said the tender offer helped renew investor confidence that had eroded after the collapse earlier this month of proposed deals involving UAL Corp. and AMR Corp. The failure of a UAL pilot-led group to get the necessary financing to buy the company helped trigger the mid-October stock plunge.
“The paper offer was helpful because it shows that deals are still going to be done or at least are attempting to be done,” said Brad Weeks, head of equity trading for Donaldson, Lufkin & Jenrette.
The market’s ability to sustain the rally throughout the session surprised many analysts, who expected investor pessimism to return after initial euphoria.
The tender offer helped revive paper stocks, which had languished in recent months, traders said.
New government data that suggested the pace of economic growth is slowing had little effect on the stock market.
Analysts said the rally was “orderly and pleasant” without the violent swings brought on by program trading. Some brokerages in recent days announced that they are suspending index arbitrage.
Bond prices headed moderately higher today in brisk early trading, buoyed by feelings that the economy is slowing down significantly.
The Treasury’s bellwether 30-year bond was up nearly 1/2 point, or $5 per $1,000 face amount, by midday. Its yield, which moves inversely to price, fell to 7.88% from 7.92% late Monday.
Analysts said the government report today showing a steep drop in new-home sales during September was largely responsible for the increase in bond prices.
Another factor, they said, was the government report that the index of leading indicators inched up last month, indicating continued slow growth in the months ahead.
“I think there’s also some anticipation of weak economic numbers for the remainder of the week,” said Jay Goldinger, who runs the Beverly Hills investment banking firm Capital Insight Inc.
“There’s the feeling that once the news is digested by the Federal Reserve, it will give them more reason to ease” interest rates, he added.
Moody’s investment grade corporate bond index was unavailable today because of computer problems at the company.
Yields on Treasury bills fell to 7.93% as the discount fell 9 basis points to 7.68%. Yields on six-month bills fell to 7.88% as the discount fell 12 basis points to 7.49%.