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Dow Flirts With 1,500, Just Misses It : Interest Rate Outlook and Falling World Oil Prices Cited for Rise

December 10, 1985|Associated Press

NEW YORK — Stock prices rose in active trading today, sparked by continuing optimism over declining interest rates and falling world oil prices.

After flirting with the 1,500 level for the second straight day, the Dow Jones average of 30 industrials rose 2.18 to close at 1,499.20.

On Monday, the average rose 19.84 to a record 1,497.02.

Gaining issues outpaced losers by about nine to seven on the New York Stock Exchange.

Big Board volume totaled 156.5 million shares, against 144.01 million in the previous session.

The NYSE's composite index fell 0.04 to 117.58.

At the American Stock Exchange, the market-value index was down 1.45 to 240.64.

Roller Coaster

The blue-chip index rode a roller coaster throughout the session, rising over the 1,500 level in opening trading before retreating. The average then staged a series of narrow advances and declines, straddling the 1,500 mark and rising as high as 1,514 during the session.

Oil stocks moved broadly lower in heavy trading, as crude oil prices again dipped on the commodity markets. Prices dropped Monday after the Organization of Petroleum Exporting Countries announced its priority was to defend its world oil market share, rather than to bolster oil prices.

The decision to focus on preserving its world share of oil sales could push prices down as competition heats up, analysts said, noting that lower oil prices would be good news for inflation.

For the past several years, OPEC has attempted to prop up prices by setting limits on production.

Texaco declined in heavy trading. A state judge in Texas reconvened a hearing today over whether he would uphold, reduce or overturn the $10.53 billion awarded by a jury to Pennzoil Co. for Texaco's conduct in its merger with Getty Oil Co.

Poison Pill

In addition, Texaco today announced it had adopted a "poison pill" stockholder rights plan to ward off hostile takeover attempts.

Union Carbide declined and GAF rose for the second day in a row. GAF on Monday made a hostile takeover bid for Union Carbide, and some observers have speculated that Union Carbide might make a counter offer to buy GAF.

In the bond market prices moved higher in early trading, driven by hopes for reductions in the budget deficit and lower energy costs.

Interest rates fell further. The yield on a benchmark 30-year Treasury bond dropped to 9.66% from 9.81% late Monday and shorter maturities posted more moderate declines.

Optimism about imminent passage of legislation that would require cuts in federal spending and bring the government's books into balance by 1991 created euphoria in the credit markets Monday, which carried over into today's session, analysts said.

In the secondary market for Treasury securities, prices of short-term governments rose between 3-32 point and 3/16 point, intermediate maturities rose between 9/32 point and 11/32 point and long-term issues were up 9-16 point, according to the investment firm of Salomon Bros.

In corporate trading, industrials jumped 1 point in very active trading and utilities rose 1/2 point

Among tax-exempt municipal bonds, revenue bonds rose 3/8 point and general obligations were up 1/2 point. Trading was moderate.

Yields on three-month Treasury bills were down two basis point at 7.18% in morning trading. A basis point is one-hundredth of a percentage point. Six-month bills dipped one basis points to 7.25% and one-year bills were down two basis points to 7.25%.

The federal funds rate, the interest on overnight loans between banks, traded at 7.875%.

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