Dow Rallies to Post-Crash High of 2,081 : Index Gains 24.70 as Big Players Return
The stock market marched to a post-crash high Tuesday in a broad-based advance supported by institutional buying and continued takeover speculation.
The Dow Jones industrial index climbed 24.70 points to close at 2,081.07, its highest level since the Oct. 19 crash.
The previous post-crash high of 2,071.62 was achieved a week ago Monday, climaxing a rally of more than 180 points in the last three weeks of February.
The market meandered through the first week of March, as profit-taking sentiment overtook the optimism amid signs, most noticeably Friday’s low unemployment figures, that the economy may be overheating.
Analysts said the rally partly reflected a desire by managers of institutional investment funds to put unused money to work, especially because the first quarter is drawing to a close in three weeks and the best possible portfolios must be presented to clients.
‘Boiling Market’
“We’re coming into show-and-tell time, the window-dressing period,” said Lawrence Wachtel, an analyst at Prudential-Bache Securities. “These guys can’t sit there with piles of cash in a boiling market and not get called down by the people who pay them to manage money.”
“Institutions are coming back into the market,” said John Burnett, trader at Donaldson Lufkin & Jenrette Securities.
Burnett said institutional investors are facing the end of the quarter “with too much cash and not enough stock.”
Providing evidence that big players were in the market, volume jumped to 237.68 million shares from 152.98 million the day before, in the second highest volume of the year. In composite New York Stock Exchange trading, gaining issues outnumbered losers by 2 to 1.
Large blocks of 10,000 or more shares traded on the NYSE totaled 4,173, compared to 3,230 on Monday.
Analysts noted that the market made its advance despite a weak dollar and modest losses in the bond market.
Leadership Void
The bond market has been in retreat since Friday, when the government reported the stronger than expected employment figures.
Although demand was steady, Robert Stovall, president of Stovall/Twenty-First Advisors, said some investors may have held back in case the results of the so-called Super Tuesday presidential primaries produce any surprises. Wall Street’s biggest fear was that a strong vote for Rep. Richard A. Gephardt, (D-Mo.), would indicate rising protectionist sentiment.
Stovall said he is not impressed with the market’s leadership. “There are still a lot of takeover situations here, but I don’t think that’s quality leadership,” he said. “All it shows is that some people with a lot of money think stocks are cheap.”
Others said the increased interest in stocks reflected true buying interest and waning anxiety by investors over the impact of the Oct. 19 collapse, along with indications that the economy is thriving.
Blue Chip Gainers
“As we move further away from the October break, more people have thrown away their bear market caps and put bull market caps on,” said Joseph Barthel, technical trading strategist at the Butcher & Singer investment firm.
Among notably higher blue chip stocks, Procter & Gamble rose 1 1/2 to 82, Du Pont rose 2 3/4 to 87 1/2 and General Electric rose 1 1/2 to 44 7/8.
Oil stocks were boosted by takeover speculation in that industry. Unocal rose 1 7/8 to 37 7/8, Kerr-McGee rose 5/8 to 36 1/2 and Phillips Petroleum rose 1/2 to 15 3/8.
Digital Equipment fell 4 to 120 3/8 after the company unveiled a line of powerful computers to challenge IBM. Analysts lowered their earnings estimates for the company because it didn’t introduce new software for the computers.
Metals stocks rose broadly, reflecting increased prices in the metals markets. Reynolds rose 2 to 45 3/8, Asarco rose 5/8 to 24 5/8 and Alcoa rose 1 1/2 to 47 3/4.
Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 267.02 million shares.
The New York Stock Exchange composite index of all listed issues rose 1.09 to 151.62.
In London, the Financial Times 100-share index closed down 3.2 points at 1,815.0.
In Tokyo, share prices closed lower, with the Nikkei 225-share index falling 150.85 points, or 0.59%, to 25,465.73. It shed 10.99 points Monday.
