Market’s Gains Are Broad-Based : Dow Climbs 40.97 to Reach Its 53rd Record of the Year
Stocks roared back to record levels Thursday as investors stopped worrying about the weak dollar and lifted the Dow Jones industrial average up 40.97 to a record high of 2,706.79.
It was the Dow’s 53rd record close this year.
The rally was broad-based, with advancing issues outnumbering decliners by more than 3 to 1 on the Big Board. The gain extended into a wide range of stock groups. That impressed observers who have complained frequently that the market’s dramatic advance since May has been short on “breadth.”
Volume on the New York Stock Exchange totaled 196.57 million shares, up from Wednesday’s 180.88 million.
“Investors were buying on weakness and looking to a stronger market ahead,” Gruntal & Co.’s Alan Ackerman said.
The market’s sharp decline Tuesday and early Wednesday stirred talk that stocks might have started a period of retrenchment. But a sudden rally in the last hour of trading Wednesday brought buying enthusiasm back to life.
“This market is showing amazing resilience. It acts basically like very few people are overcommitted and investors are looking for an excuse to buy rather than a reason to sell,” said Michael Metz, a market strategist with Oppenheimer & Co.
The drop earlier in the week was blamed on the decline in the dollar. But some analysts said it was merely an excuse to cash in gains from the Dow’s powerful 485-point rise since mid-May.
Analysts said investors wasted no time seeking bargains in the stock market when it appeared that the dollar’s steep fall had been arrested and the stock market correction had run its course.
Traders were also encouraged Thursday to see interest rates declining in the credit markets. The Treasury’s 30-year bond was up about $8.40 per $1,000 in face value, while its yield fell to 8.93% from 8.97% Wednesday. The bond dropped as much as $15 Tuesday and $4.50 Wednesday.
Wall Street’s optimism may be tested today, however, when the government issues its monthly report on the consumer price index.
Advance estimates on Wall Street call for an increase of 0.3% to 0.4% for the index in July, in line with the pace it has been setting in recent months.
Gainers among the blue chips included International Business Machines, up 2 1/8 at 174 3/4; General Electric, up 2 at 65 7/8; Philip Morris, up 3 1/8 at 106 3/4; DuPont, up 3 1/8 at 129 3/4, and Merck, up 1 7/8 at 207 5/8.
In the technology sector, Digital Equipment picked up 5 to 184 3/4; Compaq Computer gained 2 to 56 1/2; Texas Instruments rose 1 to 70; Hewlett-Packard climbed 1 5/8 to 66 5/8, and Honeywell edged up 1 5/8 to 88 1/2. Citicorp rose 7/8 to 64, bouncing back from a 2 1/2-point drop Wednesday following the company’s announcement of plans for an offering of 17 million shares next month.
Speculation about possible takeovers or restructurings apparently boosted such issues as Transamerica, up 2 3/4 at 49 3/4, and MCA, up 4 1/8 at 63 3/8, a 52-week high. More than 1.66 million MCA shares changed hands, making it the day’s ninth most active issue. MCA has traded actively for the past six weeks amid speculation that Lew R. Wasserman, the company’s 74-year-old chairman, might be willing to sell, merge or restructure the company or that it might become vulnerable to a takeover.
Moore Corp., which was added to Standard & Poor’s 500-stock composite index, gained 1 1/8 to 25.
The exchange’s composite index of all its listed common stocks rose 2.66 to 187.04, also a new high.
The credit markets, meanwhile, snapped out of a three-day slump, bolstered by a strengthening dollar. Bond prices have moved in step with the dollar throughout the week.
In the secondary market for Treasury bonds, prices of short-term governments rose between 3/32 point and 1/8 point, intermediate maturities were up between 3/16 point and 29/32 point, and 20-year issues increased 3/4 point, according to Telerate Inc.
The federal funds rate, the interest on overnight loans between banks, traded at 6.675%, unchanged from Wednesday.
