WASHINGTON — The stock market kept its early-1987 rally running Wednesday with a broad advance that fell just short of the 2,000 level in the Dow Jones industrial average.
The day's gains enabled some broader measures of market trends to join the Dow at record highs.
Dow Jones's average of 30 blue chips surged ahead to about 1,998 before pulling back to close at 1,993.95, up 19.12 from Tuesday.
Volume on the New York Stock Exchange came to 190.87 million shares, against 189.30 million on Tuesday.
Since the start of the new year, the market has been bouncing back with a vengeance from tax-motivated selling in the latter stages of 1986. From last Friday through Tuesday's close, the Dow Jones industrial average jumped 78.88 points.
There has been much speculation on Wall Street that the advance might have trouble carrying past the 2,000 level in the Dow without encountering significant resistance.
From the viewpoint of most fundamental and technical analysts, there is nothing special about any particular round number in a market average.
Nevertheless, they say, such a figure can stir up traders' emotions. "Psychologically it means a lot," said William LeFevre at Advest Inc.
Market-watchers recall that a 1,000 Dow represented a stumbling block for the market from the late 1960s through the early 1980s, when the number was at last decisively cleared. While the Dow Jones industrial average has been making most of the headlines since New Year's, Wall Streeters generally have been most impressed by the strength shown in smaller, secondary stocks. Many of these issues have been languishing since last spring.
But so far in the new year, indexes of the American Stock Exchange and the over-the-counter market have been rising more rapidly than the big-name stocks traded on the Big Board.
Among Wednesday's individual standouts, Diamond Shamrock rose 1 1/8 to 14 1/2. A group led by financier T. Boone Pickens Jr. offered to buy as many as 20 million Diamond Shamrock shares for $15 apiece.
Securities-industry issues were broadly higher, benefiting from the signs of new life in the bull market. Morgan Stanley gained 2 to 70 5/8, First Boston 1 to 47, E. F. Hutton Group 2 1/2 to 43 7/8, Salomon Inc. 3/4 to 42 3/8 and Merrill Lynch 7/8 to 40 1/8.
Forest-products stocks also were strong, with Weyerhaueser up 1 1/8 at 40 5/8, International Paper up 2 at 81 and Louisiana-Pacific up 1 at 34 3/8.
Advancing issues outnumbered declines by nearly 3 to 1 on the Big Board, with 1,212 up, 442 down and 366 unchanged. The exchange's composite index picked up 1.62 to a new high of 146.43.
Large blocks of 10,000 or more shares traded on the NYSE totaled 4,075, compared to 3,980 on Tuesday.
In the credit markets, bond prices turned higher Wednesday and short-term interest rates slipped.
The Treasury's key 30-year issue rose more than 1/2 point, or $5 per $1,000 face amount, while its yield fell to 7.30% from 7.35% onTuesday.
Corporate and municipal bonds also ended the day higher.
Credit-market analysts said a downward drift in the federal funds rate helped bond prices. The federal funds rate is the interest that financial institutions charge each other for short-term loans, and it fell to 6.125% from 6.25% late Tuesday.
In the secondary market for Treasury bonds, prices of short-term governments rose 1/16 point, intermediate maturities were up 3/16 point and 20-year issues were 3/4 point higher, according to price quotations provided by Telerate Systems Inc.
In corporate trading, industrials rose 3/4 point and utilities rose 1 1/8 points in active trading, according to the investment firm of Salomon Bros.
Among tax-exempt municipal bonds, general obligations rose 3/8 point and dollar bonds were up 3/4 point in moderate trading, Salomon Bros. said.
Yields on three-month Treasury bills were down 7 basis points to 5.40%. A basis point is one-hundredth of a percentage point. Six-month bills fell 1 basis point to 5.47% and one-year bills were down 2 basis points at 5.46%.