Stock Market Unfazed by Gulf Troubles : Program Trading Helps Propel Dow 27.03 to Post-Crash High

NEW YORK —  Stock prices rose Tuesday to their highest levels of the year, shrugging off the latest Persian Gulf troubles and choosing instead to focus on a strong dollar.

The Dow Jones industrial index surged 27.03 to 2,158.61, its best since the Oct. 19 crash and surpassing its previous post-crash closing high of 2,152.20 set June 22.

Traders said the market was aided by general optimism about the economy and a burst of futures-related program trading. Blue chips led the way after moving at midday partly on program buying.

Advancing issues outnumbered declines by nearly 2 to 1 in nationwide trading of New York Stock Exchange-listed stocks.

Volume on the NYSE totaled 171.79 million shares, down from 238.33 million Friday. Nationwide consolidated volume in NYSE-listed issues, including trading at regional exchanges and on the over-the-counter market, totaled 198.91 million shares.

A weaker dollar, lower bond prices and the U.S. Navy’s downing of an Iranian passenger jet during the weekend had convinced many traders that the stage was set for a selloff.

“A man of common sense would say we were due for continued profit taking,” said Hugh Johnson, senior vice president at First Albany Corp.

Some analysts had been concerned that the downing Sunday of an Iranian commercial airplane by the U.S. Navy might make investors skittish. But a rise in oil stocks in reaction to the event may have actually helped the general market, said Jon Groveman, head of equity trading at Ladenburg Thalmann.

But although the market opened moderately lower, the Dow index moved into plus territory about midday and steadily climbed for the rest of the session.

“The main impetus behind the lift in the Dow was buy programs by arbitragers,” said Alfred Goldman, director of technical market analysis at A. G. Edwards & Sons Inc. in St. Louis.

He was referring to a strategy that utilizes computers to automatically buy stocks in New York and sell equivalent stock index futures in Chicago to profit from price discrepancies.

The Dow index also got a solid boost from the sharply higher oil sector. Chevron was up 2 at 47; Exxon climbed 1 to 45 7/8, and Texaco rose 1/2 to 47 1/8. Each is a component of the key index.

Charles Jensen, chief technical analyst at MKI Securities Corp., said stocks are “continuing to gather a following because people are realizing they’re not going down when bonds are off--(investors) have to jump aboard despite the action in the bond market.”

Money managers, who are realigning their portfolios as the third quarter gets under way, are keying in on equities.

“There are lots of institutions that underperformed in the second quarter because they didn’t own stocks, and they came into this quarter under a little pressure” to own equities, Johnson said.

With the stock market closed for the Independence Day holiday, this session marked the first opportunity traders had to react to the Navy’s attack on the Iranian passenger plane. But analysts said the incident was largely overlooked.

“It appears that the market is suggesting that this event, as tragic as it is, will pass,” Johnson said. Fundamentally, analysts say, oil prices remain on the decline.

Among actively traded Big Board issues, IBM was up 2 5/8 at 129, General Electric was up 5/8 at 44 1/2 and AT&T; was up 1/2 at 27.

Mirroring Friday’s activity, a few utility stocks were also heavily traded as investors used short-term trading strategies to capture quarterly dividend payments. Delmar Power & Light led the actives list, closing down at 18; Carolina Power & Light was off 1/8 at 33 3/8, and Pacific Telesis closed up 1/2 at 29 7/8.

The Wilshire index of 5,000 equities closed at 2,749.004, up 31.081 or 1.14% from Friday’s close.

The NYSE index was up 1.89 at 155.57.

Standard & Poor’s index of 400 industrials rose 4.77 to 318.52, and S&P;’s 500-stock composite index closed at 275.81, up 4.03.

The American Stock Exchange index closed up 0.59 at 309.59; NASDAQ’s composite index closed at 396.11, up 1.42.

On the Tokyo Stock Exchange, stock prices rose Tuesday, buoyed by a strengthening of the yen, traders said. The dollar fell.

The Nikkei 225-share average closed at 27,577.17 yen, up 216.78.

In London, the Financial Times 100 share index closed up 6.8 at 1,854.8.