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Dow Rises 6; Oil Issues Fuel Small Stock Rally

March 04, 1987|From Times Wire Services

NEW YORK — The stock market inched higher Tuesday, buoyed by strong gains in oil issues, in an otherwise lackluster, directionless trading session. The Dow Jones average of 30 industrials closed up 6.05 to 2,226.52.

Gainers outpaced losers by about nine to eight on the New York Stock Exchange, with 811 up, 719 down and 419 unchanged.

Big Board volume came to 149.24 million shares, against 156.68 million in the previous session.

Bond prices, meanwhile, fell in mostly light trading, driven down by a muscular rebound in oil prices.

Oil stocks held center stage as oil futures contracts became firmer. Prices for oil were boosted by traders' speculation that Saudi Arabia was leading a drive among members of the Organization of Petroleum Exporting Countries to reduce production and refrain from discounting the crude they sell to support prices.

Among oil stocks listed in the Dow industrial average, Exxon rose 1 1/2 to 80 1/8, Chevron advanced 1 7/8 to 50 3/4, Texaco gained to 34 and Du Pont, which owns Conoco, added 1/8 to 100 1/8. Mobil climbed 1 to 43 in active trading, while Atlantic Richfield rose 2 5/8 to 68 1/2.

Market Lacks Motivation

But despite the rise in oil issues, most traders described market activity as being stalled after two months of sharp gains.

"We've come a long way, and it's only common sense to expect some type of pause," said Hugh Johnson, senior vice president at First Albany Corp. "The market lacks motivation. It's trendless right now."

Some analysts said the market could become motivated with the release of new data showing where the economy may be headed, and to a lesser extent, after President Reagan addresses the nation tonight on the Iran- contra affair.

Analysts said two government reports on the economy released Tuesday did little to stir the market.

The Commerce Department said its index of leading indicators--the government's main gauge of future economic activity--plunged 1% in January after four consecutive months of increases. The department also reported that sales of new homes fell 6.8% in January, the biggest decline since October.

Among the most actively traded stocks, Viacom was up 1 5/8 to 52. National Amusements escalated the bidding war for Viacom by sweetening its takeover offer for the third time in a week to about $3.4 billion.

General Motors rose 7/8 to 75 5/8. GM announced after the market closed that its board authorized the repurchase of up to 20% of its common stock by the end of 1990.

Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 176.16 million shares.

Large blocks of 10,000 or more shares traded on the NYSE totaled 3,037, compared to 2,823 on Monday.

Typifying the bond market's response to the jump in oil prices, the Treasury's key 30-year issue slid about 3/8 point, or $3.75 per $1,000 face value. That boosted its yield to 7.49% from 7.45% late Monday. In the secondary market for Treasury bonds, prices of short-term government issues slipped 1/32 point, intermediate maturities fell 1/16 to 3/16 point and 20-year issues were down 7/16 point, according to Salomon Bros. The movement of a point is equivalent to a change of $10 in the price of a $1,000 bond.

The federal funds rate, the interest charged on overnight loans between banks, declined to 6% from 6 1/8% late Monday.

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