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Dow, Up 7.11, Sets Another Record : Falling Interest Rates and Oil Prices Reignite Stock Rally

February 13, 1986|From Times Wire Services

NEW YORK — Refreshed by a one-day pause, the stock market turned upward Wednesday, returning to record altitudes on one market indicator in an advance supported by falling interest rates and oil prices.

The Dow Jones average of 30 industrials rose 7.11 to 1,629.93, breaking the record close of 1,626.38 set Monday and erasing a slight decline from the previous session.

The gain marked the fourth time in the last five trading sessions that the blue-chip index closed at a record high, giving the Dow an increase of more than 36 points over that time.

"Looking at what the market has done over the past few weeks, the market is due for a rest, but there are apparently still unsatisfied buyers around," said Michael Metz of Oppenheimer & Co. in New York.

Oil prices continued to drop Wednesday, a factor that many investors believe lessens the chances for high inflation, and helped sustain a mild bond market rally that pushed long-term interest rates lower.

For much of Wednesday's session, stock prices posted only narrowly higher gains as profit taking tempered the advance. But a moderate mid-afternoon surge attributed to several buying programs held up through the end of trading.

Goodyear rose 1/8 to 33 3/4 and led the list of the most actively traded issues on the New York Stock Exchange.

Mesa Petroleum rose 1/8 to 2 3/4 in heavy trading. Mesa Petroleum is part of Mesa Limited Partnership, the T. Boone Pickens Jr.-controlled firm that has announced an offer to acquire KN Energy, a Colorado natural gas company.

Johnson & Johnson was down 5/8 to 50 in active trading. The stock has been dropping on news that a woman died of cyanide poisoning after taking the company's Extra Strength Tylenol capsules, although authorities later said they believed that the death was an isolated incident.

IBM Slips in Heavy Trading

Also falling in heavy trading was IBM, which dropped 1 3/4 to 155. Analysts from two Wall Street firms lowered their earnings estimates for the computer giant one day after IBM announced price cuts for some of its mainframes.

Among other actively traded blue chips, Texaco rose 1 to 28, Eastman Kodak rose 1 3/8 to 49 7/8 and AT&T rose to 21 3/8.

The drop in interest rates pushed financial issues broadly higher, led by J. P. Morgan, up 2 1/8 to 64 5/8; E. F. Hutton, up 1 to 39 3/4; H. F. Ahmanson, up 2 5/8 to 64 1/8, and Great Western Finance, up 1 3/4 to 41 1/2.

Gainers outpaced losers by about three to two on the New York Stock Exchange. Large blocks of 10,000 or more shares traded on the NYSE totaled 2,601, compared to 2,867 on Tuesday.

Big Board volume totaled 136.37 million shares, against 141.25 million in the previous session.

Most bond prices gained modestly and long-term interest rates fell in response to improving inflation expectations. The Treasury's key 30-year bond finished the session up nearly 1/2 point, or $5 for each $1,000 in face amount.

In the secondary market for Treasury securities, prices of short-term governments fell from 1/32 point to 1/16 point, intermediate maturities rose from 1/16 point to point and long-term issues moved up from 11/32 point to 7/16 point, according to the investment firm of Salomon Bros.

In corporate trading, industrials went up 3/8 point in moderate dealings and utilities rose point in light trading.

Among tax-exempt municipal bonds, revenue bonds rose point in light dealings and general obligations moved up 3/8 point in moderate activity.

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