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Dow Leaps 19.40, Back Above 1,800 : Transportation Sector Surges as Stocks Rally Broadly

October 09, 1986|From Times Wire Services

NEW YORK — Stock prices pushed ahead Wednesday with enough kick to lift the Dow Jones industrial average above the 1,800 level for the first time in two weeks.

The Dow Jones average of 30 industrials climbed 19.40 to 1,803.85, bringing its gain since Sept. 29 to 48.65 points.

Volume on the New York Stock Exchange totaled 141.70 million shares, compared to 125.10 million on Tuesday.

Analysts said strength in transportation stocks contributed to a generally upbeat mood on Wall Street. In the airline sector, AMR gained 1 to 59 1/2, UAL 3/4 to 58 3/8 and Delta Air Lines 1 to 47 3/8.

They also said that hopes persisted for further declines in interest rates, even though open-market rates were mostly higher on the day. Albert Wojnilower at First Boston Corp. issued a report reiterating his forecast of lower rates to come.

In addition, brokers noted lively activity in several stocks involved in takeover developments and speculation.

Allied Stores led the NYSE's most-active list, climbing 2 to 67 on turnover of more than 5.9 million shares. Late Tuesday, the retailer approved a $67-a-share merger offer from Edward J. DeBartolo Sr., a leading shopping mall developer, and Paul Bilzerian, a California investor.

USX rose 1/2 to 28 1/8, with more than 5.5 million shares traded. Financier Carl C. Icahn has offered to buy the ailing steel and energy producer for $31 a share.

Viacom picked up 1/2 to 44. The company on Tuesday rejected a sweetened $44-a-share buyout bid from management.

Transworld Corp. jumped 2 1/2 to 32, apparently on takeover speculation. The company declined comment on the stock's activity.

Some brokers expressed concern about the continuing decline of blue-chip leader IBM, which dropped 5 3/8 on Tuesday and fell another 5/8 on Wednesday to 127 1/2 in active trading. The company, which is due to report its third-quarter earnings next week, has said its historically strong overseas business is slowing down.

IBM Rival Advances

By contrast, Digital Equipment rose 1 3/8 to 92. Traders said the IBM rival will probably post healthy third-quarter earnings.

General Electric, which posted a 5% gain in third-quarter profits on Tuesday, climbed 1 7/8 to 73 1/2.

Community Psychiatric Centers rose 5 1/8 to 37 7/8. The company said it will seek shareholders' approval to convert itself into a limited partnership before year end.

In the overall tally on the Big Board, about five issues rose in price for every three that lost ground.

Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 141.70 million shares.

Standard & Poor's index of 400 industrials gained 2.66 to 262.06, and S&P's 500-stock composite index was up 2.27 at 236.68.

Large blocks of 10,000 or more shares traded on the NYSE totaled 2,987, compared to 2,542 on Tuesday.

Bond prices tumbled in lackluster trading Wednesday, as investors continued to mull the direction of interest rates, inflation and the economy.

In the secondary market for Treasury bonds, the bellwether 30-year Treasury issue lost $8.75 for each $1,000 of face value, while its yield rose to 7.62% from 7.54% late Tuesday.

Analysts said large institutional investors appeared to have moved to the sidelines, leaving the field open for speculators, whose impact was much more apparent on the quiet market.

"There doesn't seem to be anything awfully specific that would account for the price fall today," said Norman Robertson, chief economist at Pittsburgh's Mellon Bank. "The bond market just seems to be extremely jittery. It seems to react and overreact to real and imagined economic developments."

Prices of short-term governments fell 1/16 point, intermediate maturities fell 11/32 point and long-term issues were down 7/8 point, according to the investment firm of Salomon Bros.

In corporate trading, industrials fell 3/8 point and utilities fell 1/8 point in moderate trading.

Among tax-exempt municipal bonds, general obligations fell point and revenue bonds were down 1/8 point. Trading was light.

The federal funds rate, the interest on overnight loans between banks, traded at 5.50%, up from 4.875% late Tuesday.

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