STOCKS : Dow Rises 4.03 to 3rd Straight Record Close
Stock prices broke out of an early slump Wednesday to post a third straight record high close, supported by rising high-tech stocks and a firm bond market.
The Dow Jones index of 30 blue chips rose 4.03 to 2,856.26, extending its gain over the last three sessions to 36.35 points.
Traders were encouraged at the market’s ability to rally back from a loss of more than 15 points earlier in the day. “The selling dried up and bargain hunters came in,” said Jack Solomon, a technical analyst at Bear, Stearns & Co.
Volume on the Big Board fell to 172.3 million shares from 203.4 million shares Tuesday.
Advancing issues and declines were about evenly balanced in the overall tally on the New York Stock Exchange, with 753 up, 739 down and 517 unchanged.
While the strength in high-technology stocks was a prop for the market’s rise, analysts were also worried that the group may be getting too rich. Solomon pointed out that Compaq and chip-maker Intel both hit all-time highs.
“Some technology names are running up awfully fast,” said Smith Barney technical analyst William Raftery, pointing to Microsoft’s 4 3/8-point gain to 75 7/8.
“The market may have gotten into a greed phase. When you see something like this, it indicates we’re no longer at the bottom,” he said.
The market had been gaining recently on an outlook of easier inflation and lower interest rates. But another sign of weak economic growth, falling durable goods orders, had little effect on the market.
The Commerce Department reported Wednesday morning that new factory orders for durable goods fell 4.1% in April, providing a fresh sign of weakness in the economy.
The bond market rose sharply on the news, thinking it supported the prospect of lower interest rates.
On the trading floor, Westinghouse Electric dropped 1 1/4 to 34 3/4. Traders said a Shearson Lehman Hutton analyst trimmed his rating on the company.
Precious-metals issues tumbled as the price of gold fell $11.50 an ounce to $364.60 on the Commodity Exchange in New York amid talk of gold sales by major investors in the Middle East.
ASA Ltd. lost 2 3/8 to 49 1/8; Homestake Mining fell 1 1/2 to 18 1/4; Placer Dome fell 1 to 16 1/8; American Barrick Resources fell 1 to 18 1/2, and Newmont Gold fell 1 1/2 to 43 1/2.
Energy issues also were mostly lower as oil prices sagged. Exxon dropped 1/2 to 47 3/8; Amoco fell 1/2 to 53 1/4; Chevron lost 5/8 to 69 3/8; Schlumberger dipped 3/4 to 57, and Halliburton lost 3/8 to 48 3/4.
Gainers among the blue chips included International Business Machines, up 1 at 118 3/4; Coca-Cola, up 1 3/8 at 44 7/8; Philip Morris, up 1/8 at 45 1/8; General Motors, up 1/8 at 49, and McDonald’s, up 1/2 at 34 1/8.
In foreign trading, the 225-share Nikkei index closed Wednesday at 32,176.51, up 238.21 points, or 0.75% on the Tokyo Stock Exchange.
Stocks closed mostly lower in moderate trading on London’s stock exchange, depressed by disappointing British trade figures for April. The Financial Times 100-share index finished down 23.9 points, or 1%, at 2,287.4.
In Frankfurt, West Germany, 30-share DAX index gained 18.54 points to close at 1,831.80.
CREDIT Economic News Is a Boost for Bonds Bond prices advanced in a volatile session, helped by more evidence of economic weakness and moderating inflation.
The government’s bellwether 30-year issue rose 3/8 point, or $3.62 per $1,000 face amount, while its yield fell to 8.57% from 8.60% late Tuesday.
Prices got a lift early in the session from the government’s report on durable goods, which was a bigger decline than many economists expected and suggested that the economy is weakening, a plus for bond prices.
A slowing of the economy suggests that the Federal Reserve will be reluctant to push interest rates higher and often coincides with lower credit demand.
The federal funds rate, the interest rate banks charge each other on overnight loans, was quoted at 8.25%, up from 8.188% late Tuesday.
CURRENCY Dollar Ends Higher in Subdued Trading The dollar closed mostly higher after ignoring the durable goods report.
Trading was quiet with the approach of Thursday’s Ascension Day holiday in Europe and Monday’s Memorial Day Holiday in the United States. Monday also is a public holiday in Britain.
Traders said technical factors were largely responsible for the dollar’s movement Wednesday.
In the spotlight again was the Canadian dollar, which has been under pressure in recent days. Canada’s Progressive Conservative government was thrown into turmoil after a senior cabinet minister resigned amid growing doubts about the future of a constitutional reform package.
The Canadian dollar did regain some strength Wednesday in Europe and New York.
In Tokyo, where the global trading day begins, the dollar fell 1.05 yen to a closing 151.35 yen. It traded at 150.90 yen in London, and at 151.45 yen in New York, up from 151.25 yen Tuesday.
The dollar was weaker against the British pound, compared to Tuesday. Sterling rose to $1.6975 from $1.6915 in London, and to $1.6940 from $1.6930 in New York.
COMMODITIES Pork Futures Dive on Supply Report Pork futures plummeted on the Chicago Mercantile Exchange and grain and soybean futures were mixed. Livestock and meat futures ended mostly lower on the Chicago exchange. Selling was centered in the hog and pork belly pits, where some contracts plunged their permitted daily limits in line with weakness in the cash markets.