NEW YORK, NOV. 19 -- The Dow Jones industrial average gained 15 points today in what many traders termed "remarkable" action, given mounting losses in the bond market and rising prices of crude-oil futures.
The day's action ran counter to the pattern of trading that has become familiar to traders, wherein stocks have followed the lead of bonds by trading inversely to the direction of oil prices.
As stocks closed, the U.S. 30-year Treasury bond was off nearly 3/4 point in profit-taking following what traders called an overreaction to the Federal Reserve's Friday accommodation on money supply. And December crude-oil futures settled up $1.72 per barrel, after erasing a more than $1 loss at the opening, following an Iraqi announcement that it planned to reinforce its forces in occupied Kuwait.
Traders said there were no fundamental developments responsible for sending the Dow as high as 2569, up 19 points, at the opening. But traders said the stock market seemed more interested in excuses to rally than in reasons to decline. Through most of the day, it was steady, albeit restrained, cash-market buying, not computerized program buying, that kept prices stable, traders said.
Bullish sentiment was bolstered by a new Federal Reserve action today to bolster banking reserves, reinforcing most observers' perceptions that the Fed eased short-term interest rates by its action on Friday, the second of two Fed accommodations in only the last three weeks.
"I can put my finger on no fundamental reason stocks are doing so well today," said chief trader Paul Hennessey at the Boston Co., "except that the market rose on what you might call technical momentum this morning and managed to stay positive.
"The market is up on hope," he said -- hope that Mideast tensions are dissipating with Iraq's plan to free hostages, hope that Friday's accommodation by the Federal Reserve is just another in a series of many steps to lower interest rates, and hope that, by the first few quarters of 1991, corporate profits will bounce back from relatively dreary 1990 third-quarter results.
"Although breadth isn't what you might like, and volume is not heavy by any means, there is no question that money mangers sitting on the sidelines with cash are being impressed with this action," Hennessey said.
At the close, the Dow stood at 2565.35, up 15.10, while advances led declines on the Big Board by a ratio of about 3 to 2 on moderate volume of 140 million shares.
One negative for the market was a prominent, high-volume loss for insurance-industry giant USF&G Corp. The stock fell 2 3/8 at 7 3/4, a 23 percent decline on the day, after negative comments in the Wall Street Journal's "Heard on the Street" column published today. The company's $4.10 convertible preferred tumbled 4 1/8 to 28 3/8, a nearly 13 percent loss.
Traders said USF&G shares were undermined by rekindled fears about the company's exposure to perceptions of relative weakness even among the battered insurance stocks, which had been hammered for several months before their rebound over the past several weeks. Junk bond and real estate exposure in USF&G's $11 billion investment portfolio topped the list of concerns, as did fears of another dividend cut like the 66-percent slash previously announced by the Baltimore firm.
But other financial stocks showed relatively little movement. Big bank stocks traded narrowly mixed all day. Citicorp, for example, eventually closed down only 3/8 at 13 1/2 despite its announcement of a plan to redeem another $75 million in auction-rate preferred stock, on top of the $275 million of redemptions announced on Nov. 7. The bank has had trouble pricing these instruments lately due to loss of investor confidence.
Among Dow components, leadership remained in the hands of the same five stocks that led the index all day. IBM rose 1 1/8 to 114 3/4, Eastman Kodak gained 1 to 43, Procter & Gamble added 1 to 81 7/8, Philip Morris moved up 7/8 to 49 and Boeing tacked on 7/8 to 47 1/4. While Texaco slumped 1 1/2 to 57 1/8, other losses were only small fractions.
The Dow transports gained 3.33 to 867.80, while the utilities firmed 0.44 to 208.69.
Among broad stock indexes, the Standard & Poor's 500 was up 2.22 at 319.34, the NYSE Composite rose 1.04 at 174.34, the Value Line was up 1.21 at 230.32, the Amex Market Value fell 1.05 at 296.47 and the Nasdaq Composite climbed 1.88 at 352.73.