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Blue Chips Set Pace as Stocks Rally : Dow Industrial Index, Off 13 at Midday, Closes Up 12.52

July 31, 1986|From Times Wire Services

NEW YORK — Blue-chip issues set the pace as the stock market rallied from some early declines to finish mostly higher Wednesday.

Analysts said the market's gyrations came as Wall Streeters tried to assess the outlook for the government's next quarterly sale of bonds and notes.

The Dow Jones average of 30 industrials, down about 13 points at midday, closed with a 12.52 gain at 1,779.39.

Volume on the New York Stock Exchange picked up to 146.69 million shares from 115.69 million on Tuesday.

After the close, the Treasury announced that it would sell $28 billion in bonds and notes next week. The size of the refunding package came in a bit smaller than some market watchers had feared it might be.

Upward Pressure on Rates

There has been talk on Wall Street lately that a large new supply of government securities might be greeted by weak demand, especially with foreign investors worrying about a declining dollar.

If those fears were borne out, brokers said, upward pressure on interest rates would be likely. That, in turn, could mean a further setback to hopes for any improvement in economic growth and corporate earnings.

Gainers among the blue-chip and technology stocks included International Business Machines, up 1 at 132; General Electric, up 7/8 at 73 7/8; International Paper, up 1 at 64 1/2; Eastman Kodak, up 3/4 at 56 3/4, and Digital Equipment, up 3 1/2 at 92.

But Bethlehem Steel fell 2 to 7. The company said it expects to post a significant loss for 1986 and omitted dividends on its preferred stock.

Cullinet Software tumbled 2 3/4 to 8 1/8. Late Tuesday, the company said its sales and earnings for its 1987 fiscal year would fall short of expectations.

Compaq Computer, by contrast, gained 7/8 to 13 3/8 after the company chalked up a 70% increase in earnings for the second quarter.

ITT rose 1 3/4 to 54 on word that the French government won't oppose plans for ITT and France's state-owned CGE to form a joint venture in telecommunications.

Energy stocks were generally strong, with Exxon up 1 3/4 at 61 1/8, Chevron 1 1/2 to 36 3/8, Amoco 1 to 58, Atlantic Richfield 3/4 to 46 1/2, Mobil 5/8 to 30 3/8 and Texaco 1/2 to 29 5/8. Exxon, Chevron and Texaco are components of the Dow Jones industrial average.

In the overall tally on the Big Board, advancing issues and declines ran about even.

Large blocks of 10,000 or more shares traded on the NYSE totaled 2,630, compared to 2,283 on Tuesday.

Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 173.94 million shares.

Standard & Poor's index of 400 industrials rose 2.33 to 261.25, and S&P's 500-stock composite index was up 2.04 at 236.59.

Government bond prices finished unchanged to slightly lower after a day of ups and downs as the credit markets reacted to fresh signs of sluggish economic activity and the Treasury's borrowing plans.

Corporate and municipal issues fared better, gaining on the day.

Early in the session, government securities prices were boosted by a Commerce Department report that showed that the nation's trade deficit expanded to a record six-month level of $83.9 billion.

The report, which also showed a $14.2-billion deficit for June alone, indicated that the country's poor trade performance will continue to be a drag on overall economic growth. A separate report showing a drop in new-home sales in June added to the evidence of economic weakness.

Industrials Ahead

The Treasury's 30-year bond was off about 11/32 point from late Tuesday's level, which raised its yield to 7.51% from 7.48% late on Tuesday.

In the secondary market for Treasury bonds Wednesday, prices of short-term governments ranged from unchanged to off 1/16 point and intermediate maturities were up 1/32 point to down 1/32 point, according to the investment firm of Salomon Bros. The firm said the 20-year bond was unchanged.

In corporate trading, industrials pushed ahead by 3/8 point while utilities were up 1/2 point in moderate trading.

Among tax-exempt municipal bonds, revenue bonds gained 3/4 point in brisk dealings and general obligations rose 1/2 point in more moderate activity.

Yields on three-month Treasury bills were unchanged at 5.84%. Six-month bills fell 2 basis points to 5.85%. One-year bills were down 3 basis points at 5.91%.

The federal funds rate, the interest on overnight loans between banks, traded at 6.388%, unchanged from late Tuesday.

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