Dow Gains 15.09 in Blue Chip Rally

The stock market rose Tuesday, pushing the blue chip index up more than 15 points, thanks to a stronger bond market and renewed interest in takeover stocks.

The Dow Jones index of 30 industrials rose 15.09 to close at 2,058.36. The key index rose nearly 11 points in the previous session.

Advancers outnumbered decliners by roughly 3 to 2 in the overall tally of New York Stock Exchange-listed issues. Broader market gauges also advanced.

Big Board volume totaled 176.92 million shares, against 136.47 million in the previous session.

However, a good portion of the day’s activity was attributed to strategies related to dividends, particularly of utility stocks.

Much of the session’s activity centered on heavy trading in American Electric Power, which went ex-dividend Tuesday. The stock led the Big Board’s most-active list, rising 1/8 to 27, and accounted for about a quarter of total trading volume.

“If you remove the dividend trades, the participation remains anemic,” said Hugh Johnson of First Albany Co. “There is no sign that momentum is picking up or that conviction and confidence is rising,” he added.

Sellers Scarce, Too

A decline in the yield on 30-year Treasury bonds paved the way for mild bargain hunting in stocks, traders said.

“It is possible that we will make it up to 2,100 (in the Dow) in this rally,” said Don Crooks, a trader with Morgan Stanley & Co. “But it’s not because there are a lot of buyers around. It’s just that there are even fewer sellers.”

Takeover speculation, for “real or imaginary” reasons, drove trading in a handful of other blue-chip issues, noted Alfred Goldman, vice president at A. G. Edwards & Sons in St. Louis.

In addition to being fueled by the rumor mill, analysts said takeover issues heated up in anticipation that cash will soon be freed up from other deals. As the takeovers of Federated Department Stores and textile giant J. P. Stevens & Co. move toward settlements, funds are likely to flow into other “possible deal-type” stocks, said Eugene Peroni, chief market strategist at Janney Montgomery Scott in Philadelphia.

“This is going to free up a lot of capital that will find its way back to the arbitrage circuit,” he said.

Despite the rather narrow focus of activity, analysts noted that the market’s overall tone is improving. “The Dow has been producing much more encouraging technical signs that suggest we are going to work higher,” Peroni said.

Less Like a Casino

Program traders were shut out of the market in the early going because of a water main break at the Chicago Mercantile Exchange, where the futures on the Standard & Poor’s 500 index are traded. Activity was halted for more than 2 1/2 hours.

Some analysts welcomed the absence of program plays. “It’s a refreshing case of a stock market rather than a casino,” said Michael Metz, vice president and technical analyst at Oppenheimer & Co.

Arbitragers remained mostly on the sidelines once futures activity resumed, analysts said.

Among actively traded issues, USG climbed 3 1/8 to 44 5/8 on news that the company has offered a $45-per-share restructuring in response to advances by Desert Partners.

Gillette was off 1 3/8 to 39 7/8. The company said a preliminary report shows its slate of candidates won board seats in a proxy fight waged by Coniston Partners, which plans to challenge the count.

Control Data was up 1 3/4 to 26 5/8 following reports that Canada’s Belzberg family may be considering making a bid for the computer company.

Woolworth jumped 3 to 60 1/2 on speculation that the Haft family, which has filed to acquire up to 15% of the retailer, was buying shares. Gould Inc., which announced an asset sale as part of a new restructuring, was up 2 to 13 3/8.

Indicators Rise

Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 201.9 million shares.

The NYSE’s composite index rose 0.74 to 148.57, while the Wilshire index of 5,000 equities closed at 2,622.121, up 13.917.

Standard & Poor’s industrial index rose 1.76 to 306.70, and S&P;’s 500-stock composite index was up 1.44 at 263.00.

The NASDAQ composite index for the over-the-counter market gained 2.49 to 382.23. At the American Stock Exchange, the market-value index closed at 303.22, up 0.76.

In foreign trading, share prices ended mixed on the London Stock Exchange, with gains in most international stocks the only feature in an otherwise torpid market.

The Financial Times 100-share index finished at 1,807.2, up 5 points from Friday’s close.

British financial markets were closed Monday for a bank holiday.

The Tokyo stock market was closed for holidays that will last through Thursday.