Dow Climbs 13, Pushing Beyond the 2,500 Mark : Blue Chips and Takeover Issues Pace the Market’s 4th-Straight Record Day

Wall Street’s bull market, coming up to its fifth anniversary, passed a new milestone Friday as the Dow Jones industrial average closed above 2,500 for the first time.

The Dow average of 30 industrial stocks, which rose 13.07 points to 2,510.04 in its fourth consecutive record close, has climbed a remarkable 31% since the beginning of the year. The average closed above 2,000 for the first time on Jan. 8.

Volume on the New York Stock Exchange remained active at 209.98 million shares, down slightly from Thursday’s 210.88 million.

The Dow Jones industrials flirted with the 2,500 mark Wednesday and Thursday, only to close below it both times.

However, the average moved cleanly past that round-number landmark Friday morning, with the help of a strengthening dollar on foreign exchanges and a decline in open-market interest rates. Several other market measures also closed at new highs.

Analysts said blue chip stocks gaining from strong earnings reports and issues involved in takeovers and buybacks paced the market’s fourth consecutive gain.

Perceptions that the economy remains sluggish, keeping inflation subdued, were reinforced when the Commerce Department reported that housing starts fell 0.7% last month.

Earnings Reports Help Market

Analysts say the market has also benefited lately from impressive second-quarter earnings reports by several leading industrial companies.

With all the positive developments, brokers said Friday’s advance typified the rally since late May in its lack of speculative ebullience.

“This whole thing has crept up on us,” said Hugh Johnson at First Albany Corp. “There’s still a healthy amount of skepticism among investment advisers.”

“I don’t like the breadth of the market and I am not that comfortable with the leadership,” said Eugene Peroni, head of technical analysis at Janney Montgomery Scott. Peroni said that when corporate earnings slacken, the market could lose the reason for the rally.

Kenner Parker jumped 5 1/2 to 45 7/8. Analysts said a $41-a-share bid for the company from New World Pictures prompted speculation that a higher offer might be forthcoming.

Among the stocks that make up the Dow, Coca-Cola rose 2 to 47. The company announced plans to buy back as many as 40 million of its common shares over the next three years.

Philip Morris, which reported strong second-quarter earnings Thursday, added 1 1/2 to 96 7/8.

RJR Nabisco gained 1 to 57 3/4. On Thursday the company posted higher quarterly earnings and raised its dividend.

At the same time, investors continued to bid up international stocks such as Korea Fund, up 2 5/8 at 86 3/8, and Taiwan Fund, up 10 at 54 in trading on the American Stock Exchange.

Among leading Japanese issues, Matsushita Electrical rose 3 3/8 to 156 3/4; Kyocera gained 3 1/8 to 78 5/8, and Honda Motor was 2 at 102 3/8.

Advancing issues outnumbered declines by about 7 to 5 in the overall tally on the NYSE. The exchange’s composite index of all its listed common stocks gained 0.97 to 176.67.

Standard & Poor’s index of 400 industrials rose 1.89 to 368.33, and S&P;’s 500-stock composite index was up 1.89 at 314.59. The Wilshire index of 5,000 equities closed at 3,101.438 up 14.848.

The NASDAQ composite index for the over-the-counter market picked up 0.87 to 434.08. At the Amex, the market-value index closed at a record high for the ninth straight session, up 0.36 at 353.45.

The bond market was also given a lift by the dollar’s continuing improvement in foreign exchange. Bond prices were also aided by speculation that the Federal Reserve was easing credit restrictions.

The Treasury Department’s key 30-year bond rose 13/32, or about $3.75 for each $1,000 in face amount, and its yield declined to 8.55% from 8.59% Thursday.

Corporate and municipal issues were up.

The federal funds rate, the overnight interest charged on loans between banks, was quoted at 6.68%, up slightly from 6.50% Thursday. The relatively low rate was interpreted by many traders as evidence the Fed was easing up on credit, according to Sung Won Sohn, chief economist with Norwest Corp., a Minneapolis-based bank holding company.

When the fed funds rate is lower, it is an indication that banks have more money available to them to meet reserve requirements set by the Fed.