Dow Hits Record High : Up 19.95 in Near Record ’90 Trading

Stocks closed at an all-time high today on buying carried over from last week’s rally, although profit-taking late in the day pared the overall gain.

The Dow Jones industrial average, which soared 63.07 on Friday, closed up 19.95 points at 2,821.53--well above its previous high closing, 2,810.15 recorded on Jan. 2.

The Dow, which was up as much as 52 points in earlier trading, also shattered its intraday high of 2,822.95, set the morning of Jan. 3.

Volume was a strong 225.41 million shares, compared with 234.04 million shares traded Friday, the year’s heaviest trading day. Gains outpaced losses by 2 to 1 on the New York Stock Exchange.

Traders said investor enthusiasm carried over from Friday’s big rally. But a bout of selling late in the day held down the gain in the Dow index.

Prices were higher in active trading of American Stock Exchange issues.

Despite an afternoon pullback that analysts attributed to profit taking after Friday’s surge, the market staged a broad-based rally for the second straight session, thanks to a huge amount of carryover institutional buying from Friday and a lot of computerized program buying.

“It’s just a little slowdown. We’re absorbing some of the runup,” said James Andrews, first vice president of institutional trading at Janney, Montgomery Scott Inc. in Philadelphia.

Andrews said the rally has been driven by institutions, which have held large cash positions, putting their money to work again. “And if we get an indication that rates are coming down, we could see real big swings on the upside,” he said.

The rally has been attributed to a sudden favorable swing in economic statistics of late, which has reduced worries over inflation and the interest-rate outlook.

In afternoon trading, Treasury notes and bonds were as much as 3/8 point higher after bonds surged more than 2 points Friday after the government report of a decline in April producer prices, which made investors feel more confident that interest rates have peaked and that inflation is under control.

“You couldn’t have put together a better combination of news for the market,” said Hugh Johnson, chief economist at First Albany Corp. in Albany, N.Y.

The U.S. Treasury bond market gained a bit more ground today following Friday’s big rally, with prices of government issues unchanged to slightly higher in quiet early trading.

The Treasury’s closely watched 30-year issue was up nearly 1/8 point, or $1.25 per $1,000 face amount, by midday. As a result, its yield, which moves inversely to the price, inched lower to 8.65% from 8.66% Friday.

On Friday, the 30-year bond soared about $17.50, while shorter-term issues also posted heathy price gains, reflecting a change in market psychology.

Market watchers say recent government reports have convinced many traders the economy is growing only moderately and inflationary pressures are subsiding. For instance, the government reported Friday that retail sales declined steeply in April and inflation on the wholesale level had eased that month.

Also boosting to the market was the success of the government’s three-day quarterly refunding last week.