Stock Market Rally Roars Ahead : Dow Adds 27.90, Chalks Up Third Straight Closing High

The stock market took off in another late-session rally that sent the Dow Jones industrial average to its third straight record high Thursday.

The closely watched index, marking its seventh upside close in a row, rocketed 27.90 to end the session at 2,567.44.

That topped Wednesday’s 19.77-point surge to 2,539.54, which in turn had bested Tuesday’s 25.83-point run to its previous record high of 2,519.77.

Other indexes hit new peaks as well. But bond prices closed lower in lackluster trading as the Treasury Department began auctioning off a flurry of securities following a temporary lifting of the nation’s debt ceiling.

Analysts attributed the latest performance to a combination of factors which have fueled the rally since it began, after having closed last Tuesday on a drop of nearly 20, at 2,467.95.

These include an ocean of cash held by institutions and foreign investors and a get-on-board psychology. In addition, they said, traders have been impressed by better-than-expected second-quarter earnings reports released during the past two weeks.

Coming against a backdrop of gloom and uncertainty about the direction of the economy, prospects for higher inflation and worries over Persian Gulf tensions, those positive reports have served to intensify the market’s upbeat mood, analysts said.

“Wall Streeters just can’t sit on the sidelines while blue chips are taking off, showing good earnings,” said Ralph J. Acampora, an analyst at Kidder, Peabody & Co.

Among New York Stock Exchange-listed issues, 208.02 million shares traded hands.

Advancing issues outpaced decliners by about 3 to 2 on the NYSE, with 968 issues up, 618 down and 404 unchanged.

In the credit markets, meanwhile, the Treasury’s 30-year bond was down 5/16 point, or about $2.50 per $1,000 in face amount, while its yield jumped to 8.83% from 8.79%. Corporate and municipal issues were mixed.

Analysts were divided over whether the bond market was driven lower by a government report that the index of leading indicators rose 0.8% in June.

In the secondary market for Treasury bonds, prices of short-term government bonds were 3/32 point to 5/32 point lower, intermediate maturities were 5/32 point to 9/32 point lower and 20-year issues fell 1/32 point.

In corporate trading, industrials and utilities were up point.

Among tax-exempt municipal bonds, figures for general obligations were unavailable. Revenue bonds fell 1 point in light trading.

In the secondary market, yields on three-month Treasury bills were 6.05%, down 7 basis points from the auction average established earlier in the day. Six-month bills were down 5 basis points to 6.13%, and one-year bills fell 1 basis point to 6.40%.

The federal funds rate, the interest on overnight loans between banks, traded at 6.75%, up from 6.68% Wednesday.