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Market Soars on Strength of Program Buying : Dow Industrials Climb 31.49 in Brisk Trading; Transportation Issues Up

October 16, 1986|From Times Wire Services

NEW YORK — The stock market ran up a strong gain Wednesday in a rally attributed to buying by professional traders engaged in computer-program activity.

The Dow Jones average of 30 industrials climbed 31.49 to 1,831.69 for its best daily showing since it rose 38.38 points on Sept. 4. Volume on the New York Stock Exchange came to 145.01 million shares, up from 116.82 million on Tuesday.

Analysts said there was little in the economic or financial news to explain the advance. Before the start of trading, the government reported that retail sales increased 4.6% in September.

At first glance, analysts said, the figures hinted at a stronger pace of business activity than expected. Traders in the credit markets responded with caution, pushing interest rates up a bit.

Transportation Index Sets Record

But it was widely noted on Wall Street that almost all of the gain arose from auto sales, which were inflated by offers of below-market financing. Thus, hopes persisted that the Federal Reserve still might find room to ease credit further before the end of the year.

While the industrial average posted the best percentage gain among the Dow Jones averages, the transportation average also attracted a lot of attention, rising 8.50 to 836.13. That surpassed the previous closing high of 830.34, which it set at the end of March.

The industrials remained about 88 points short of the closing peak of 1,919.71, which was reached Sept. 4.

Among the blue-chip industrials, International Business Machines climbed 2 1/8 to 123; American Telephone & Telegraph, 1 3/8 to 24 3/4; Minnesota Mining & Manufacturing, 3 1/8 to 107, and Sears, Roebuck 1 3/8 to 43. Brokers said the strength in IBM, which has been under heavy selling pressure lately as its third-quarter earnings came in below earlier expectations, helped set the tone for the market in general.

E. F. Hutton gained 1 7/8 to 48 3/4 in active trading. The company, which has been the subject of recurring takeover rumors and speculation, said it knew of no reason for the activity.

Amerada Hess, also discussed as a possible takeover candidate, rose 1 1/8 to 26 7/8 and ranked as the most active issue on turnover of more than 4 million shares.

On the downside, Trans World fell 1 to 29 3/8. The company said its earnings per share for the third quarter would be lower, citing an increased tax rate.

Advancing issues outpaced declines by more than five to two on the Big Board, with 1,166 up, 429 down and 377 unchanged.

A total of 2,931 blocks of 10,000 or more shares traded on the NYSE, compared to 2,316 on Tuesday.

Standard & Poor's index of 400 industrials rose 4.08 to 264.74, and S&P's 500-stock composite index was up 3.43 at 238.80.

Bond prices were little changed in quiet trading. The U.S. Treasury's key 30-year issue, which was off about $2.50 per $1,000 face value by noon, rose about 5/16 point. Its yield dropped to 7.76% from 7.79% late Tuesday.

Bond traders said the Commerce Department's retail sales report was in line with investor expectations and had little effect on the market.

"The market's response was really quite lackadaisical," said Ward McCarthy, senior money market economist with Merrill Lynch Capital Markets.

Other dealers confided there was more interest in the National League baseball playoff games between the New York Mets and Houston Astros than in the bond market this week.

In the secondary market for Treasury bonds, prices of short-term governments were unchanged, intermediate maturities dropped 1/8 point and 20-year issues were off 3/8 point, according to the investment firm of Salomon Bros.

The Shearson Lehman daily Treasury bond index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, rose 1.17 to 1,225.84.

In corporate trading, industrials and utilities were unchanged in moderate trading.

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