Stocks Gain as Interest Rates Dip; Dow Up 9.94

March 07, 1986|From Times Wire Services

NEW YORK — Signs of new downward pressure on worldwide interest rates helped the stock market post its first clear-cut gain of the week Thursday.

Securities industry and regional telephone issues turned in some of the best showings.

The Dow Jones average of 30 industrials rose 9.94 points to 1,696.60.

Volume on the New York Stock Exchange came to 158.99 million shares, up from 154.56 million Wednesday.

West Germany's central bank announced a reduction of its discount rate to 3.5% from 4%. There were reports that the Bank of Japan might also lower its key interest rate before the week is out.

Analysts said those developments prompted expectations of further declines in U.S. interest rates as well.

The Federal Reserve's discount rate, the charge that it sets on loans to private financial institutions, has been at 7.5% since last May. The Fed has been reluctant to lower it, apparently because it wants to keep the dollar relatively steady in foreign exchange. But lower interest rates abroad would presumably give the Fed more leeway to reduce its rate without subjecting the dollar to much strain.

Amerada Hess Tumbles

In the credit markets Thursday, rates on short-term Treasury bills declined seven to nine basis points. Gains in the prices of long-term government bonds, which move in the opposite direction from interest rates, were spotty near the end of a volatile day.

Amerada Hess tumbled 3 3/8 to 19 5/8 in active trading. Late Wednesday, the company said it will omit its dividend and expects a substantial loss for the first quarter as a result of falling oil prices.

Among other energy issues, Exxon fell to 52, Chevron 5/8 to 35 3/4, Atlantic Richfield 5/8 to 51 3/4 and Occidental Petroleum 7/8 to 24 3/8. Occidental said it has no plans to cut its dividend this year.

In the securities industry group, Merrill Lynch rose 2 to 42 3/4, Phibro-Salomon 1 to 51 1/2, E. F. Hutton 1 3/4 to 42 3/8 and Paine Webber 1/2 to 42 1/2.

Point-plus gainers among the regional telephone issues included Nynex, up 2 7/8 at 113 3/8; Southwestern Bell, up 1 at 91, and U.S. West, up 1 at 95 3/4.

Dart & Kraft, which reported plans to buy back as many as 10 million of its shares, added 1 3/4 to 47 1/2.

Marantz jumped 1 7/8 to 11. The company posted a sharp sales increase for February.

In the overall tally on the Big Board, advancing issues outnumbered declines by about nine to five.

Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 188.82 million shares.

Government Bond Prices Gain

Large blocks of 10,000 or more shares traded on the NYSE totaled 3,267, compared to 2,854 on Wednesday.

Standard & Poor's index of 400 industrials gained 0.78 to 247.88, and S&P's 500-stock composite index was up 0.79 at 225.13.

Government bond prices wound up with moderate gains, and short-term interest rates declined. Prices of corporate and municipal issues pulled back.

Government securities had suffered large losses on Wednesday as traders sold heavily to lock in some of the profits that they had amassed during the market's powerful run this year. By the time trading ended in New York on Thursday, Treasury bonds had partially recovered.

In the secondary market for Treasury securities, prices of short-term governments rose from 1/8 point to 3/16 point, intermediate maturities gained from 3/32 point to 3/16 point and long-term issues ended the session with increases of 3/32 point to 13/32 point.

Analysts said the market for corporate debt was struggling under the weight of a heavy inventory of new issues. Industrials and utilities were off 1/2 point in quiet dealings.

Among tax-exempt municipal bonds, general obligations lost 3/4 point in light activity, and revenue bonds were down 1/2 in heavy trading.

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