Late Rally Gives Stock Prices Boost : Dow Closes at Highest Level Since Last October’s Crash

NEW YORK — A late rally catapulted the stock market Tuesday to its highest close since last October’s crash, as Wall Street overcame its jitters on the eve of Black Monday’s one-year anniversary.

The Dow Jones index of 30 industrials jumped 19.38 to 2,159.85, scoring most of the gain in the waning minutes of the session. The blue chip average brushed past the previous post-crash high of 2,158.96 reached on Oct. 10.

Traders said earlier in the day that the impending crash anniversary appeared to have overawed many investors, keeping them out of the market. But Donald Crooks, a trader with Morgan Stanley & Co., said the late gains came from “real” buying.

“Everyone was waiting for a chance to come in. There was a lot of cash on the sidelines,” Crooks said.

Tuesday’s post-crash peak was still 21% below the all-time high of 2,722.42 reached on Aug. 25, 1987.

Advancing issues outnumbered declines by about 8 to 5 in nationwide trading of New York Stock Exchange, with Big Board volume rising to 162.5 million shares, up from 119.29 million shares.

Analysts said there was no overpowering reason for the rally, which was encouraged by buy programs and a drop in oil prices.

Traders also said news of Philip Morris’ mammoth $11.5-billion bid for Kraft Inc. helped spark interest in stocks.

“This blockbuster bid from Philip Morris for Kraft really set the tone and got a lot of people excited about stocks,” said Jon Groveman, head trader at Ladenburg Thalmann & Co.

Groveman said the stock buying came late as oil prices were falling to the lowest level of the session in New York. The resurgence of oil prices had put a scare into the bond market in recent days.

“It looks kind of like the bears have given up,” said Crandall Hays, investment strategy director at Robert W. Baird & Co. “The path of least resistance seems to be up. I suspect it’s going to continue.”

The market seemed undecided in its direction from the opening, with blue chips softening in early trading partly on a decline in Philip Morris shares, which were hurt by the likely short-term earnings penalty that it must pay for the Kraft buyout, if it goes through. The stock dropped 4 1/2 to 95 1/2.

Kraft stock shot up 28 1/8 a share to 88 in heavy trading, just below the $90 a share offered by Philip Morris.

After drifting alternately higher and then lower, blue chips began moving decisively upward in the last 30 minutes of trading.

John Brooks, managing director at Marshall & Co., said strength in IBM, which jumped 3 to 124 3/8, was providing “a little bit of backbone” to a market that had been floundering since making its previous post-crash high last Monday.

“That stock has been acting like a bull,” he said. The interest stirred in stocks by the Kraft deal, he added, has been “a good shot in the arm for everybody.”

In Tokyo, share prices fell as a series of factors, including uncertainty about the health of Emperor Hirohito, conspired to keep trading extremely light. The Nikkei 225-share index lost 126.76 to close at 27,141.98.

On the London Stock Exchange, share prices closed slightly lower in active trading. The Financial Times 100-share index fell 3.0 to 1857.0, its lowest point of the day.