Down 25, Dow Turns Up on Gulf Rumor to Gain 14

A late burst of buying sparked by rumors that Iraq was considering withdrawing from Kuwait lifted the stock market to its third consecutive gain today.

The Dow Jones average of 30 industrials, which was down more than 25 points with 30 minutes left in the session, finished with a gain of 14.11 to close at 2,579.70.

Advancing issues outnumbered declines by about 3 to 2 on the New York Stock Exchange, with 905 up, 633 down and 455 unchanged.

Big Board volume totaled 185.82 million shares, against 177.01 million in the previous session.

The NYSE’s composite index rose 1.12 to 178.19.

At the American Stock Exchange, the market value index rose 0.04 to 302.64.

The market’s major indicators were trading well below Monday’s closing levels late in the session when rumors swept the market that Iraq had come up with a new proposal to withdraw from Kuwait.

The rumors, based on a British television news report, fanned speculation the Persian Gulf crisis could be resolved without bloodshed.

Up until those reports circulated in the last half hour of trading, the market was generally lower on what analysts attributed chiefly to profit-taking in the wake of a big gain on Friday and a smaller advance on Monday.

Bank stocks were doing well, however, in the wake of today’s announcement by the Federal Reserve that it was easing reserve requirements to stimulate lending and ease a credit crunch hurting the economy.

Bond prices edged up in early trading today on news that the Federal Reserve agreed to cut its bank reserve requirements.

The Treasury’s bellwether 30-year bond was up 5/16 point, or $3.13 per $1,000 in face amount, around midday. Its yield, which moves in an opposite direction from price, eased to 8.33% from 8.36% late Monday.