Dow Climbs 24.66 to Its Third Straight Record
The stock market advanced Monday, gaining support from a stronger dollar, higher bond prices, growing foreign demand and an effort by large investors to embellish their portfolios before the second quarter ends.
The Dow Jones industrial average rose 24.66 to close at an unprecedented 2,445.51, the third straight session that Wall Street’s best-known barometer has hit a record.
Most broader market indicators also advanced but lagged behind the pace set by the Dow industrials. Still, many analysts said the tone of the market remained positive for the near future.
“The major influences in the market are what’s been stimulating buyers in the last several weeks. The bond market is firm, the dollar is firm and institutional investors are still holding large levels of cash reserves,” said Alfred Goldman, director of technical market analysis at A. G. Edwards & Sons, a large brokerage based in St. Louis, Mo.
With only six trading days left before the second quarter concludes, many portfolio strategists for large institutions are scrambling to put that money into stocks to adorn their quarterly reports, analysts said.
Jack Solomon, an analyst at Bear Stearns Cos. in New York, also attributed some of the market’s performance to what he called “quarterly and semiannual window-dressing by the institutional investors.”
He also said Wall Street was excited by the prospect of heavy foreign interest in U.S. equities, particularly from wealthy Japanese investors.
“There’s a lot of cash to be invested. You put it all together, bonds are up, interest rates are down,” he said. “Everything fell into place today to put the market way up.”
Shares in Minneapolis-based Dayton Hudson fell sharply amid growing skepticism that Dart Group would be able to launch a successful takeover bid. The stock closed down 2 1/2 at 54 on volume of more than 2.28 million shares. A company spokesman said Minnesota Gov. Rudy G. Perpich is expected to decide Wednesday whether to call a special legislative session to vote on the company’s proposed amendments to toughen the state’s anti-takeover law.
Among notable blue-chip issues, Merck gained 3 1/2 to 169, General Electric rose 2 1/8 to 55 1/2 and IBM added 1 7/8 to 163.
Precious metals stocks fell sharply because of the dollar’s strength, which has caused a selloff in gold. ASA dropped 2 1/8 to 55 1/8 and Homestake lost 1 3/8 to 32 3/4.
Chemical stocks were widely higher, marked by Dow, which rose 2 to 87; DuPont, which climbed 1 to 120, and Monsanto, which advanced 2 3/8 to 84. Imperial Chemical rose 2 to 95 after it announced the sale of the specialty chemical business of its Stauffer Chemical unit to the U.S. subsidiary of Akzo, a Dutch chemical company.
On the New York Stock Exchange, gaining issues outpaced losing issues by about eight to seven. Volume on the big board totaled 178.21 million shares, compared to 220.48 million in the previous session.
In the bond market, Treasury bond prices staged a strong advance as the dollar continued its climb on foreign exchange markets.
The Treasury’s bellwether 30-year issue rose 27/32 point, or nearly $8.50 per $1,000 face amount, after having risen 5/32 point on Friday. Its yield dipped to 8.40% from 8.47% Friday.
Robert Brusca, chief economist and senior vice president for the fixed-income division at Nikko Securities Co. International, said bond prices rose on the strength of the dollar.
He said the credit markets got a psychological lift from the fact that the dollar had successfully crossed two barriers: 1.84 West German marks and 146 Japanese yen.
The federal funds rate, the interest on overnight loans between banks, traded at 6.875%, up from 6.688% Friday.
