Dow Soars 32 to Close at New Record Amid Interest-Rate Hopes

NEW YORK — The stock market jumped to new record highs today amid hopes for further declines in interest rates.

The Dow Jones average of 30 industrial stocks soared 32.20 to 1,810.70, surpassing the previous record close of 1,804.24 it set last Thursday. The industrial index jumped to a strong start at the opening bell and progressed higher throughout the session.

Advancing issues outnumbered declines by nearly two to one on the New York Stock Exchange. Big Board volume totaled 161.46 million shares, against 139.25 million in the previous session.

The NYSE’s composite index rose 1.49 to 136.71. At the American Stock Exchange, the market-value index was up 1.65 at 268.17.

Analysts said the market bounced back from a recent spell of profit-taking with the help of a highly positive news background.

The 0.4% drop in the consumer price index reported by the government Tuesday exceeded most expectations on Wall Street.

Easing of Credit Policy

With inflation dormant and economic activity remaining relatively subdued, many analysts believe the case has been strengthened lately for more easing of credit policy by the Federal Reserve.

Furthermore, brokers said some investing institutions apparently were buying as they prepared their portfolios for first-quarter reports to clients.

Prices rose in the bond market in early trading, with long-term securities showing the strongest gains. Trading in corporate issues was particularly brisk.

Interest rates--which move in the opposite direction of prices--were mostly unchanged, with the exception of rates on longer dated instruments.

For instance, the yield on the key 30-year Treasury bond slid to 7.84% from 7.90% late Tuesday. The price of the bond rose about 5/8 point, or $7.50 for each $1,000 in face amount.

A promising inflation outlook, largely due to the weakness in petroleum prices, has enhanced the chances for further interest rate declines, analysts said.

Speculation that the Federal Reserve Board may again reduce its principal loan rate resurfaced in the markets.

Bond traders were talking about the possibility that the Japanese government may trim its discount rate, perhaps as soon as next week, or at least before the economic summit takes place in May in Tokyo, said Mitchell Held, a vice president at Smith Barney, Harris Upham & Co.

When the Fed cut the U.S. discount rate by a half point to 7% earlier this month, the move was preceded by similar actions by foreign central banks.

“The market’s up in part because there are beginning to be some rumors of another discount rate cut. The economic numbers have not been inspiring, and with U.S. money supply growth low, and inflation under control, the Fed has the flexibility to ease its grip on credit,” Held said.

Among recent negative economic numbers, the Commerce Department said Tuesday that durable goods orders slipped 0.5%, while major American auto makers reported sales of domestically made cars plunged in mid-March.

Expectations that there will be sufficient demand for new government paper at the Treasury’s auction today also helped trading. The Treasury is concluding a two-part financing operation with the sale of $6.5 billion in seven-year notes. It sold $7 billion in four-year notes Tuesday.

Yields on three-month Treasury bills edged up one basis point to 6.41%. A basis point is one-hundredth of a percentage point. Six-month bills dipped one basis point to 6.44% one-year bills fell three basis points to 6.48%.

Two Bond Indexes Rise

In the secondary market for Treasury securities, prices of short-term governments edged up by 1/32 point to 1/16 point, intermediate maturities rose by 3/32 point to 3/8 point and long-term issues spurted by 5/8 point to 21/32 point, according to the investment firm of Salomon Bros.

At midday, the Merrill Lynch daily Treasury index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, stood at 117.04, the same as Tuesday’s close of 117.05. The Shearson Lehman daily Treasury bond index, which makes a similar measurement, rose 2.12 to 1,227.39.

In corporate trading, industrials and utilities moved up point in busy trading.

Among tax-exempt municipal bonds, revenue bonds gained 1/2 point in average trading volume and general obligations rose 1/2 point in lighter trading.

The federal funds rate, the interest on overnight loans between banks, traded at 7.5%.