IBM Paces Pack as Stocks Rally; Dow Rises 12.51

NEW YORK — Investors drove stocks higher Wednesday in a Christmas Eve buying binge--the so-called Santa Claus Rally--but volume was the lowest since the day after Thanksgiving.

The Dow Jones average of 30 industrial stocks, down about 14 points the two previous days, recovered most of the lost ground, rising 12.51 to 1,926.88. Gaining issues outnumbered losers by nearly three to two on the New York Stock Exchange, where volume slowed to 95.41 million shares, down from 188.7 million on Tuesday. It was the slowest trading day since 93.53 million shares changed hands on Nov. 28, the day after Thanksgiving.

IBM provided a good part of the market’s lift, climbing 1 1/2 to 122, as investors who stayed around long enough took an opportunity to pick up a bargain in the recently beleaguered stock. It had fallen 2 5/8 Tuesday on reports that several investment firms cut its 1986 and 1987 earnings estimates.

AT&T; led the Big Board’s most active list, rising 1/8 to 25 1/2 as 3.28 million shares changed hands.

Active Blue Chips

Among other active blue chips, Goodyear was down at 41 5/8, USX rose to 21 3/4, American Express rose 3/4 to 58 3/4, Exxon rose 1/2 to 74, Texaco was up 1 to 36 and Merck rose 3 1/2 to 123.

UAL fell 3 1/8 to 54, and Transworld fell 1 1/8 to 32 3/4.

Retailing issues continued sagging under weaker than expected Christmas sales. K mart fell 1 to 44, J. C. Penney dropped 7/8 to 74 3/8 and Federated Department Stores dipped 1/2 to 86 1/8.

Almost a third of the trading volume was accounted for in the first hour of the session when 28.2 million shares traded hands. Only 30 million shares were traded in the afternoon. “I would say half The Street was missing this afternoon,” said Ron Doran, head of institutional trading at First Albany Corp. “We had a lot of order cancellations by 1 o’clock.”

Bond prices were little changed in ho-hum Christmas Eve dealings Wednesday with most markets closing up early. Traders focused attention on the Christmas and Hanukkah holidays. With no economic data scheduled to be released, most investors were reluctant take any new market positions.

In the secondary market for Treasury securities, the 30-year bond was unchanged to yield 7.34%. Short-term governments were down 1/16 point, intermediate maturities ranged from down 1/16 point to up 1/16 point and 20-year issues rose 1/8 point.