Computer Buying Boosts Market; Dow Climbs 27.25
Stock prices rose broadly today in light trading, boosted by several waves of computer-driven buying, traders said.
The Dow Jones average of 30 industrials rose 27.25 to 2,676.80.
Advancing issues outnumbered decliners by more than 2 to 1 on the New York Stock Exchange, with 1,026 up, 457 down and 504 unchanged.
Big Board volume totaled 143.64 million shares, against 140.11 million in the previous session.
The NYSE’s composite index rose 2.02 to 186.17.
At the American Stock Exchange, the market value index rose 2.17 to 358.81.
The currency and bond markets initially provided little direction for the stock market, and stock prices drifted slightly higher during the morning. But in the early afternoon, the dollar strengthened, bond prices rose and the buy programs kicked in.
“You had a bond market that waffled a bit and then came on strong,” said Austin George, head of equity trading for mutual fund operator T. Rowe Price Associates.
Robert L. Kahan, manager of equity trading at Montgomery Securities Inc. in San Francisco, said trading was quiet until early afternoon because of a lack of news affecting the market.
The buying driven by computer programs was launched when stock index futures jumped in price relative to the underlying stocks.
“It just kind of touched the level (to activate the programs) a couple of times,” George said.
Government bond prices moved modestly higher this morning, staging a rebound after Monday’s sharp sell-off.
Most of the buying was concentrated in the long end of the credit market.
The 30-year U.S. Treasury bond sported a gain of 7/32 point, or just under $2.50 per $1,000 face amount, around midday. The yield on the benchmark bond, which falls when its price rises, declined to 8.63% from 8.65% late Monday.
In a setback Monday triggered in part by speculation about possible interest rate hikes abroad, the 30-year bond tumbled 1 5/32 point, or $11.56 per $1,000 face amount, and its yield climbed from 8.54% late Friday.
Market analysts attributed some of today’s renewed buying to a perception that Monday’s selling was overdone.
