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Dow Rises 42.92; Stocks Surge as Investors Jump on Bandwagon

October 02, 1987|From Times Wire Services

NEW YORK — Stock prices surged on Thursday in a rally led by the technology issues that lifted the Dow Jones industrial index to its highest levels in a month.

"We've seen an upside explosion in these stocks and now everybody is jumping on the bandwagon," said Hildegard Zagorski of Prudential-Bache Securities.

The Dow Jones index of 30 leading stocks jumped 42.92 points to 2,639.20 as investors poured cash into the market on the first day of the third quarter of the year.

The enthusiasm engulfed the broader market, where advancing issues outnumbered declines by nearly 2 to 1 in the overall tally on the New York Stock Exchange. The exchange's composite index gained 2.73 to 182.97.

Volume on the Big Board rose to 193.20 million shares from 183.07 million in the previous session.

Analysts said institutional investors traditionally buy shares at the start of each quarter and that traders were beginning to look ahead optimistically to corporate earnings reports for the third quarter, which ended Wednesday.

The figures, with a few notable exceptions, are expected to show more of the improving trend that began early this year.

Interest rates rose in the credit markets Thursday, but settled back from their early highs.

Charles Jensen, an analyst at MKI Securities, said hopes appeared to be spreading that bond prices were close to a turning point after their decline over the last six months.

Those hopes are pinned largely to signs that the dollar has stabilized in foreign exchange and to expectations that forthcoming data on the nation's trade balance will show improvement.

Analyst Michael Gumport of Drexel Burnham Lambert recommended several semiconductor stocks, saying he expects industry sales to rise next year.

IBM jumped 3 7/8 to 154 5/8 in brisk trading, recovering some of its recent drop.

National Semiconductor was the most actively traded NYSE issue, jumping 1 3/4 to 20 1/8 after an analyst with investment house Smith Barney called the stock "very undervalued." The firm received clearance Wednesday to buy Fairchild Semiconductor.

Motorola rose 3 3/8 to 73, while Texas Instruments finished up 3 3/8 at 78.

Gainers among the blue chips included Ford Motor, up 3 1/8 at 101 1/8; Philip Morris, up 1 5/8 at 120 1/2; Eastman Kodak, 3 7/8 higher at 105 3/4, and American Telephone & Telegraph, up 1 at 34 3/4.

Buying spread into a broad range of industry groups, including such manufacturing sectors as forest products and chemical stocks.

In the paper and forest products group, International Paper rose 2 to 54 1/8, Boise Cascade gained 4 3/8 to 83 5/8, Weyerhaueser advanced 1 3/8 to 53 1/2 and Louisiana-Pacific climbed 1 to 39.

Among the chemicals, Du Pont picked up 1 to 120 1/8, Dow Chemical gained 2 to 107 5/8 and Monsanto advanced 3 1/8 to 98.

IBP Inc. traded at 19 after an initial public offering of 21.5 million shares at that price. In the offering, Occidental Petroleum sold a little less than a half interest in the company, which was once known as Iowa Beef Processors.

In foreign trading, a steep decline in local Japanese bond prices sent stocks in Tokyo falling sharply Thursday, ending six consecutive sessions of higher prices.

The Nikkei 225-share market index slumped 289.14 to 25,721.74. Declines led advances 5 to 2.

In London, stocks closed higher, but they fell from earlier levels as investor optimism based on a new bout of takeover fever gave way to selling, dealers said.

The Financial Times 100-share index retreated from a day's high of 2,385.1 to close at 2373.8, up 7.8.

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