NEW YORK — The stock market showed broad strength Tuesday as the Dow Jones average of 30 industrials set another record, reflecting traders' hopes for non-inflationary growth in the U.S. economy.
The Dow Jones average was stalled for most of the day but surged in the final hours of trading to close near the 1,400 level, rising 6.99 to a record 1,396.67.
Volume on the New York Stock Exchange rose to 119.20 million shares from 104.94 million on Monday.
Five issues rose in price for every three that fell on the NYSE.
Analysts said the overall strength of stocks eased fears that blue-chip stocks were getting ahead of the rest of the market, something that might set the stage for a sharp sell-off.
"It certainly looks to me like the market boom wants to go higher," said Newton D. Zinder, a senior vice president of E. F. Hutton & Co. He pointed to strong employment growth and a declining value of the dollar as positive factors.
"Even though the economy seems to be reviving, interest rates are trending downward, and that's unusual--at least in the last 10 or 15 years it's unusual," Zinder said. "It's good for the market."
The market continued to show resilience against sales by traders who were cashing in on earlier gains, said Larry Wachtel, first vice president of Prudential-Bache Securities.
Among the 105 NYSE-listed stocks hitting 52-week highs during Tuesday's trading were American Broadcasting Cos., which closed up 1/8 at 118; Chrysler, which closed up 1 at 41; Eli Lilly, up 1 3/4 at 95 3/4, and Pepsico, up 7/8 at 65.
IBM Moves Up
Twenty stocks hit 52-week lows.
International Business Machines, a bellwether of the market because of its prominence in the portfolios of investing institutions such as pension funds, rose 1 1/8 to close at 133 3/8 on heavy volume of 1.8 million shares.
The Dow Jones averages of transportation and utility stocks also rose.
The market seemed to take heart from prospects of lower oil prices. Venezuela reduced the price of its heavy crude oil by 40 cents a barrel, matching a cut by Mexico last week.
Oil stocks were mixed, with Exxon down 7/8 at 53 1/2, Texaco up 1/8 at 38 1/2 and Chevron unchanged at 38.
Bond prices ended the Tuesday trading session with moderate gains and interest rates had a mixed showing.
Dealers took comfort in a decline in the federal funds rate, which is the interest fee on overnight loans between banks to meet federal reserve requirements. Economists monitor the federal funds rate for signals about Federal Reserve Board monetary policy.
The federal funds rate traded at 8% late Tuesday, down from 8.25% on Monday.
In the secondary market for Treasury securities, prices of short-term governments edged up by 2/32 to 3/32 point, intermediate maturities went up between 3/32 and 5/32 point and long-term issues rose between 8/32 and 11/32 point.
The Merrill Lynch daily Treasury index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, rose 0.17 to 107.53. The Shearson Lehman daily Treasury bond index, which makes a similar measurement, rose 1.23 to 1,127.90.
In corporate trading, industrials and utilities rose point in light trading.