NEW YORK, DEC. 5 -- The Dow Jones industrial average sliced through the 2600 mark today, closing up 30 points on falling oil prices and the prospect for U.S-Iraq peace talks.
The afternoon rally was prompted by continued aggressive buying in financial issues, hard hit during the recent sell-off, and news that Iraq had officially agreed to the peace talks on the Persian Gulf suggested by President Bush last Friday. The Middle East news also sent oil prices down more than $3 to their lowest levels since the invasion of Kuwait in August.
On the trading floor, there was some talk today of a December rally.
"A good many stocks look like they've already seen their bear-market lows," said technical analyst Gail Dudack at S.G. Warburg. "And December usually has a strong upward seasonal bias, anyway." Any rally should be more selective than most bulls believe, however, Dudack said. "Yes, the banks are moving up as a group, but I think that will be the exception," she said.
"Trading buys will be found in the sold-out high-technology and financial groups, but in general it will be more a rally for individual stocks throughout the list rather than for specific industry groups or for the market as whole," Dudack said.
Other traders suggested that a good deal of the buying today was actually the purchasing of stock previously sold short for return to owners of record.
At the close, the Dow stood at 2610.40, up 30.70, while advances far outpaced declines on the Big Board by a ratio of about 2 to 1 on heavy volume of 205 million shares.
Among Dow components, American Express took up the mantle of leadership, posting a full-point gain throughout the afternoon -- in line with an extremely strong financial sector -- and closing up 1 3/4 at 22 3/4, while Primerica closed up 1 1/4 at 25.
Alcoa finished up 1 1/4 at 56 1/4, General Electric up 1 1/2 at 57, Minnesota Mining up 1 at 83 5/8, Union Carbide up 1 at 16 7/8, and Westinghouse up 1 1/8 at 28 1/4.
But the truly impressive moves were concentrated in the banking sector, where money centers benefited from follow-through buying after Tuesday's action in the wake of what was widely perceived as de facto easing by the Federal Reserve. On Tuesday morning, the Fed took the unusual action of eliminating some banking reserve requirements, freeing more than $12 billion for new loans.
In contrast with Tuesday, however, large regional banks, government loan-guarantee agencies, financial-services stocks and some insurance companies benefited conspicuously from spillover buying today.
Among the nation's biggest banks, Wells Fargo soared 4 3/8 to 59 1/2, First Interstate surged 3 1/2 to 25 3/4, and Bankers Trust leaped 2 7/8 to 44 1/4. Republic New York also spurted 2 5/8 to 50 7/8, while Security Pacific gained 2 5/8 to 25 1/2, Bank of New York rose 2 to 21 3/4, First Chicago added 2 3/8 to 21 1/8, J.P. Morgan ran up 2 3/4 to 46 and Manufacturers Hanover tacked on 2 3/4 to 23 1/8.
All money centers were up at least a point, except for Continental, which nonetheless posted an impressive percentage gain of 7/8 to 10 1/8.
The Dow transports finished up 21.82 at 903.67, but the utilities lagged, closing flat at 212.72.
Among broad stock indexes, secondary stocks kept pace with the blue chips. The Standard & Poor's 500 closed up 3.57 at 329.92, the NYSE Composite up 1.92 at 180.11, the Value Line up 3.88 at 240.40, the Amex Market Value up 2.77 at 305.41 and the Nasdaq Composite up 6.76 at 370.87.