Stocks Extend Rally; Dow Up 11.39
Wall Street stocks followed through on last week’s rally today, closing with moderate gains that were pushed up by a sharp fall in oil prices and solid gains in the bond market.
The Dow Jones average of 30 industrials rose 11.39 to 2,502.23 on top of last week’s 54.70-point gain.
Advancing issues outnumbered declines by more than 9 to 5 on the New York Stock Exchange, with 1,027 up, 543 down and 424 unchanged.
Big Board volume totaled 147.51 million shares, against 168.70 million in the previous session.
Oil prices tumbled today, pushed down on signs that inventories remain high despite the Persian Gulf crisis. The December crude oil contract on the New York Mercantile Exchange was off $2.04 at $31.96 a barrel.
Analysts say the market has also drawn support lately from expectations of a drop in interest rates.
With evidence mounting of weakness in business activity, many observers say, the Federal Reserve is getting more and more leeway to relax its credit policy.
Wall Streeters hope cheaper money will alleviate the credit problems that have been unsettling the banking industry and the real estate market.
The depressed bank stocks, which began an upswing late last week, posted further gains today. Manufacturers Hanover rose 7/8 to 18 1/2; BankAmerica 1 1/8 to 21 1/2, and J.P. Morgan 1 to 40.
Among other prominent financial issues, Federal Home Loan Mortgage gained 1 3/8 to 37 5/8 and Federal National Mortgage was up 5/8 at 29 7/8.
Bond prices moved moderately higher in light early trading today as many market players stayed on the sidelines, waiting to see whether the Federal Reserve would nudge interest rates lower.
The Treasury’s bellwether 30-year bond rose 1/4 point, or $2.50 per $1,000 in face amount. Its yield, which falls as the bond’s price rises, slipped to 8.67% from 8.70% late Friday.
Bonds also were supported by a decline in oil prices.
But trading was very light as many bond investors decided to wait and see if the Fed would relax its credit policy and allow interest rates to fall, analysts said.
Toward that end, many traders were waiting to see the October producer price report from the Labor Department on Friday. If the report shows an acceleration of inflation, the Fed would have less leeway in lowering rates.
Analysts said the market was also waiting to see how much demand there is for bonds in the Treasury’s quarterly refunding auction this week. The government is selling three-year notes Tuesday, 10-year issues on Wednesday and 30-year bonds on Thursday.
In the secondary market for Treasury bonds, short-term maturities were 1/16 point to 5/32 point higher, intermediate maturities ranged from 7/32 point to 1/4 point higher and long-term issues rose 1/4 point, the Telerate Inc. financial information service reported.
