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Stocks and Bonds Post Broad Gains; Dow Up 8

January 16, 1986|From Times Wire Services

NEW YORK — Both the stock and bond markets chalked up broad gains Wednesday, continuing their recovery from last week's sell-off.

The Dow Jones average of 30 industrials climbed 8.25 to 1,527.29.

Volume on the New York Stock Exchange stepped up to 122.42 million shares from 113.92 million on Tuesday.

Analysts said the stock and bond markets seemed to have stabilized after their sharp declines last week, when strong employment figures jolted many traders' hopes for lower interest rates.

They got some help Wednesday from talk that the United States would propose a coordinated effort toward lower interest rates when finance ministers of five leading industrialized nations meet this weekend. Secretary of the Treasury James A. Baker III declined to comment on the reports.

Stocks also appeared to benefit from buying by investors who had been waiting for a pullback from the record highs reached in late 1985.

Gain for IBM

International Business Machines, a strong performer on the active list all day, rose 3 3/8 to 152 5/8. The company is expected to report a higher fourth-quarter profit later this week.

Elsewhere among computer issues, Digital Equipment jumped 4 3/8 to 141 3/8 and Honeywell 2 3/4 to 77 1/2 as both companies announced higher quarterly earnings.

Falling interest rates sparked buying in such financial issues as Federal National Mortgage, up 2 at 26, and Great Western Financial, up 1 1/8 at 36 1/8.

In the banking group, Chase Manhattan gained 3 1/2 to 78 3/4. The company declared a 2-for-1 stock split and an increased cash dividend.

Precious-metals stocks advanced as the price of gold climbed $9.80 to 349.50 on the Commodity Exchange in New York. ASA Ltd. rose 1 to 39 3/8, Homestake Mining 7/8 to 26 1/8, Dome Mines 3/4 to 11 and Campbell Red Lake Mines 1 3/4 to 24.

Some investors have been buying gold and gold-mining stocks lately on the theory that a stronger economy will bring with it a pickup in the inflation rate.

Champion Spark Plug added to 10 1/8. The company, noting what it described as unusual activity in its stock, said it wasn't involved in any kind of merger talks.

The daily tally on the Big Board showed more than two issues advancing in price for every one that declined.

In the bond market, a benchmark 30-year Treasury bond rose about 3/4 point, or about $7.50 for each $1,000 in face value. Corporate and municipal issues also posted gains.

The yield on the key Treasury bond declined to 9.42% from 9.55% late on Tuesday.

In the secondary market for Treasury securities, prices of short-term governments finished up from 1/16 point to 5/32 point and intermediate maturities rose from 7/32 point to 7/16 point, according to the investment firm of Salomon Bros. The movement of a point is equivalent to a change of $10 in the price of a bond with a $1,000 face value.

The Merrill Lynch daily Treasury index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, rose 0.62 from late Tuesday to 109.94. The Shearson Lehman daily Treasury bond index, which makes a similar measurement, rose 6.74 to 1,154.20.

Bonds Rise

In corporate trading, industrials rose 3/4 point and utilities moved up 7/8 point in moderate dealings.

Among tax-exempt municipal bonds, revenue bonds rose 5/8 point and general obligations were up 1/2 point in moderate activity.

Yields on three-month Treasury bills dipped two basis points to 7.18%. Six-month bills fell one basis point to 7.26% and one-year bills were also down one basis point, at 7.30%.

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