Stocks rose sharply to record levels in heavy trading Thursday on rumors of an imminent meeting of the Group of Five major industrial nations to coordinate another round of interest rate reductions.
A Japanese news agency reported in Tokyo that finance ministers and central bank governors of the five countries would hold talks "in a day or two" to decide on interest rate cuts to stimulate the world economy. A Federal Reserve spokesman said there was no G-5 meeting scheduled.The Dow Jones average of 30 industrials climbed above its record closing level of 1909.03 set on July 2 and was ahead 27.84 points to 1909.17 at 3 p.m. The transportation index rose 14 points to 783.50, and the utilities index rose 1.26 to 217.94.
Advancing issues led declining issues by better than 2-to-1 on the New York Stock Exchange, where volume totaled 147.7 million shares with an hour of trading remaining.
Energy and transportation issues advanced across a broad front.
Hopes for a rebound in the economy contributed to the spurt, with traders looking ahead to today's report on the employment situation for August. Bonds declined on talk the non-farm payroll figure could be strong, but rebounded on the G-5 rumors.
Airline stocks advanced in anticipation of an end to fare-cutting wars in the industry, but Texas Air Corp.'s Continental Airlines subsidiary announced $99 one-way fares from New York to Hawaii.
Among the big gainers in the transport group at midafternoon, Burlington Northern rose 2 to 56 , United Airlines' parent UAL rose 1 to 58, Federal Express advanced 1 to 61 , and American President Companies gained 1 to 25 in trading that included a block of 108,000 shares.
Allied Stores jumped 10 to 59 after Campeau Corp., a Toronto-based real estate concern, proposed to acquire the company for $58 a share. Other retailing issues benefited from improved August sales figures.
Automobile stocks were mixed in line with late-August car sales. General Motors was unchanged at 70 after reporting a 5.3 percent decline in sales, while Ford Motor fell to 57 and Chrysler rose to 39 at midafternoon. Ford's sales plummeted 31.7 percent and Chrysler's rose 1 percent in the Aug. 21-31 period.
Institutions continued to add to their underweighted holdings of oil stocks following the recent firming in oil prices. Exxon rose 1 to 70 at midafternoon. The company said it applied to list its shares on the Tokyo Stock Exchange. The listing is expected to take place in the fourth quarter. No other foreign oil company is listed on the Tokyo exchange.
Bristol Myers slipped to 75 , and Pfizer fell to 65 . Sanford Bernstein reportedly issued negative comments on both stocks.
The market will move to new record highs, but some popular stocks already have reached their absolute peaks for a long time to come and many more are probably as high relative to the market as they will get, according to James McClure, chief investment officer for Oppenheimer Management.
Mr. McClure told Mutual Fund News Service, San Francisco, small stocks should outperform large ones, something that hasn't happened in the last two years. Some stocks that have been out of favor in recent months should do ''outstandingly well," he said.