NEW YORK — On the 58th anniversary of Wall Street's crash of 1929, the stock market had a field day Thursday.
Emboldened both by Wednesday's market resilience and by indications from Washington that proposed takeover legislation may be made less strict, investors pushed prices of a broad array of stocks sharply higher in another vigorous trading day.
The movement was even more impressive because it occurred while the dollar was taking another pounding on foreign exchange markets. At one point in the day, the dollar traded in New York at a 40-year low of 137.20 Japanese yen, although it closed slightly higher at 138.30. (Details in Business.)
A Winning Streak
The Dow Jones average of blue-chip industrial stocks, stringing together its first three-day winning streak of this treacherous month, shot up 91.51 points, or 5%, to end the day at 1,938.33. It was the closely watched index's third-largest gain for a single day ever.
Even more important, the blue chips' three-day endeavor to start a rally finally caught fire. Traumatized over-the-counter stocks, led by high-technology issues, had their second-best day since the stock market's Oct. 19 trouncing, and all of the broader market measures rose sharply.
"We almost had to bar the doors. Everybody was pouring in," effused James C. Andrews, manager of institutional trading for the Philadelphia investment firm Janney Montgomery Scott.
In another shortened session on the New York Stock Exchange, 258.14 million shares changed hands Thursday, contrasted with 279.41 million on Wednesday.
The market's nervousness hasn't entirely subsided, however. "The badly hit lower-priced stocks are finally coming back up, but the bigger stocks and the better names are still leading the way," said Gene J. Seagle, director of technical research for Gruntal & Co.
The bond market, in a departure from its customary behavior, also had a good day. Rising stock prices and a weak dollar usually mean lower bond prices.
Further Decline Expected
Traders and economists cited a strong feeling among some bond market participants that stock prices still have further to fall.
"There is still a considerable flow of money into fixed-income" securities by jittery investors, said Allen Sinai, chief economist for Shearson Lehman Bros., in explaining the bond market's "impressive performance."
Although the stock market headed up from the opening bell, Andrews said investors were "very hesitant" at the start of the day. Overseas stock prices had tumbled further overnight and the dollar was taking another whipping.
But in short order, investors shrugged off those concerns and ignored the fate of the British government's planned offering of British Petroleum, a sale that had preoccupied investors on Wednesday.
German Bank's Move
Their focus shifted to rumors that West Germany's central bank was planning to cut the interest rate that it charges banks and on a remark by Rep. Dan Rostenkowski (D-Ill.) after Wednesday's market had already closed. Rostenkowski, chairman of the House Ways and Means Committee, promised to consider changing proposals in his tax package that would slow takeover activity.
It was his provision to sharply limit interest expense deductions associated with mergers and acquisitions that many blame for precipitating Wall Street's Oct. 19 crash--the worst in history. And it was his most recent remarks that re-lit the market's spark on Thursday.
"When the market totally ignored the steep fall of the dollar on Wednesday, that statement of resiliency set the tone for Thursday. But Rostenkowski saying he is flexible was much more important, and takeovers led the day," said Jonathan Groveman, a market strategist at Ladenburg Thalmann in New York.
Takeover Stocks Gain
Takeover stocks, among the most badly battered over the last two weeks, were Thursday's biggest beneficiaries. Brockway, the target of an Owens-Illinois tender offer, surged $13 a share to $43.50. Takeover target Singer Co. rose $9.75 a share to $42. And virtually all other companies rumored to be takeover targets saw similarly big gains in their stocks' value.
Rostenkowski's comment was widely viewed as a confidence builder.
But pollsters and market analysts are beginning to find that consumer confidence in the market may not have been damaged as much as some analysts had feared.
A survey conducted for the Conference Board, a New York-based business research group, found that the market's collapse caused only a modest dip in consumer confidence. Nearly 73% of the consumers surveyed said the stock market turmoil will have no effect on their buying plans, and 74% said they are either unconcerned or only somewhat concerned by the plunge in stock prices.
Taking Crash in Stride