Dow Gushes Up 23.89; Oil Stocks Lead Rally
The stock market shot higher late today as oil stocks led an afternoon rally.
The Dow Jones Industrial Average closed up 23.89 at 2,753.13.
Analysts said large block purchases of oil company stocks pushed the market above the narrow trading ranges that characterized the earlier part of the day, when the Dow was up slightly but losers outpaced gainers in the broader market.
“It looks like a pretty big rush to the plate with oils,” said Eugene Peroni of Janney Montgomery Scott Inc. in Philadelphia. “I think there’s a perception that oil prices are going to be moving higher next year.”
Analysts said much of the buying in energy issues occurred in computerized program trading.
The market traded narrowly higher most of the day, with component companies of the Dow industrials leading a slight advance. Analysts said the increase masked broader weakness among other stocks.
Technology issues traded lower, reflecting a general slowdown in computer sales and weak earnings reports for some major firms.
Otherwise, traders said the market generally was biding time until the release on Friday of reports on the producer price index for November and the October trade deficit. Friday also brings expiration of stock-index futures and options.
Bond prices steadied in quiet early trading today in the absence of market-moving news.
The Treasury’s key 30-year bond was unchanged at midday, and its yield stood at 7.88%, the same as late Monday.
Analysts said bond trading was lackluster as dealers awaited the government’s latest data on producer prices, merchandise trade and industrial production, due out Friday.
Those reports are expected to shed more light on the economy’s direction and, subsequently, on the Federal Reserve’s policy on interest rates.
In the secondary market for Treasury bonds, prices of short-term, intermediate-term and long-term issues were unchanged to 1/32 point higher by midday, according to 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, rose 0.56 to 1,194.37.
Yields on three-month Treasury bills rose to 7.86% as the discount rose 3 basis points from the level at auction Monday to 7.62%. Yields on six-month bills stood at 7.94%, and the discount rose 1 basis point from the level at auction Monday to 7.39%. Yields on one-year bills fell to 7.70% as the discount fell 2 basis points to 7.21%.
A basis point is one-hundredth of a percentage point. The yield is the annualized return on an investment in a Treasury bill. The discount is the percentage that bills are selling below the face value, paid at maturity.
