Dow Rockets 30.98 to 2,501.1; Traders See a ‘Soft Landing’
The stock market jumped ahead today, pushing past the 2,500 level in the Dow Jones industrial average with help from falling interest rates.
The Dow Jones average of 30 industrials climbed 30.98 points to 2,501.10, extending its gain for the week to 71.40 points.
The last time the average closed above 2,500 was Oct. 13, 1987, when it stood at 2,508.16 six days before Black Monday.
Advancing issues outnumbered declines by nearly 2 to 1 on the New York Stock Exchange, with 1,015 up, 519 down and 456 unchanged.
Big Board volume totaled 242.41 million shares, up from 177.48 million in the previous session.
The NYSE’s composite index rose 1.63 to 178.92.
Interest rates declined in the credit markets. Prices of long-term government bonds, which move in the opposite direction from interest rates, posted gains ranging to more than $5 for each $1,000 in face value.
That served to reinforce spreading hopes on Wall Street that the Federal Reserve would succeed in its effort to engineer a “soft landing” for the economy, restraining inflation without causing a recession.
Analysts said stocks also seemed to be benefiting from a sort of bandwagon effect.
The recent gains in the market, they noted, have put pressure on money managers who have been holding large cash reserves to try to catch up with the performance of their fully invested competitors.
Bond prices were higher in early trading today, with long-term government issues posting the strongest gains.
The Treasury’s benchmark 30-year bond was up 23/32 point, or more than $7 for every $1,000 in face value. Its yield, which moves inversely to price, fell to 8.70%, from 8.77% late Thursday.
Analysts said the continued strength in the dollar and the absence of selling in the bond market were helping to push prices higher.
“What you have in the bond market is a huge appetite for dollar-denominated investments. The stability and strength in U.S. currency has further encouraged foreign investors to be more active in the market,” said Maria F. Ramirez, money market economist for Drexel Burnham Lambert Inc.
