Dow Hits All-Time High, but Without Excitement : Market Overview
* The Dow Jones industrial average inched up to a record high Tuesday, but the broad market failed to show much excitement.
Early today in Tokyo, the Nikkei index resumed a deep selloff.
* Long-term bond yields closed mostly unchanged. They had risen early in the day, after a top Federal Reserve System official hinted that the central bank may be forced to tighten credit soon.
* Oil stabilized after plunging Monday to five-year lows.
The Dow added 8.67 points to close at a record 3,718.88, topping the previous high of 3,710.77 set Nov. 16.
But in the broad market, other stock indexes were mixed. The Standard & Poor’s 500 index inched up 0.34 point to 466.77, but the Nasdaq composite index eased 1.74 points to 769.35.
Winners just slightly outnumbered losers on the Big Board, although volume remained active at 285.7 million shares.
“It’s always nice to have a new high” in the Dow, said Dennis Jarrett, analyst at Kidder Peabody. “But you really want to see more enthusiasm in the marketplace to really say that this is something sustainable and not a flash in the pan.”
Some analysts said investors were anxious ahead of inflation statistics scheduled for release later this week.
Traders also noted nervousness over comments made by David Mullins, vice chairman of the Federal Reserve Board. Speaking in Washington, Mullins said the Fed should tighten monetary policy before inflation starts accelerating, rather than waiting until after.
“Once inflation pressures are clearly visible . . . it seems awfully late in the game,” Mullins warned.
Although he did not say specifically when the Fed might raise short-term interest rates, he said the next few weeks will be an “important crossroads” in formulating monetary policy.
Still, traders noted that a small Fed rate increase may already be anticipated in the stock market. Historically, stock prices have been able to rise even with gradually rising interest rates, as long as corporate profits are growing with the economy.
Among the market highlights:
* The Dow was boosted by Sears, up 2 1/8 to 54 1/4 after recent profit taking, and by Boeing, up 2 1/8 to 41 after brokerage Salomon Bros. recommended the stock.
* Despite new rumblings of a Fed rate increase, many utility, bank and other interest-rate-sensitive stocks continued to rebound from recent selloffs.
The Dow utility index rose 1.71 points to 227.52, the highest level since early November. Gainers included Houston Industries, up 1/4 to 46 1/8; SCEcorp, up 1/8 to 20 1/2, and Detroit Edison, up 3/8 to 32 3/8.
Among financial stocks, California Federal Bank rose 1/2 to 14 1/8, Wells Fargo gained 2 1/2 to 123 5/8 and SunAmerica jumped 1 to 39 3/4.
* Farm equipment maker Deere tumbled 3 3/8 to 70 3/8 after it tempered its higher fourth-quarter earnings report with a conservative forecast for 1994. Also falling was Caterpillar, off 1 7/8 to 84.
Other industrial issues showed strength. Ford added 1/2 to 63 3/8, Inco gained 1 1/2 to 26, Cummins Engine gained 5/8 to 49 5/8 and M.A. Hanna added 5/8 to 31 1/2.
* WMS Industries rose 5/8 to 32 3/4. News reports said the maker of pinball games, which is 25%-owned by Viacom chief Sumner Redstone, recently has in turn invested in Viacom Class B shares. The purchases may have helped support Viacom’s stock price during its ongoing takeover battle with QVC Network for Paramount Communications, traders said.
Southland-based Pairgain surged 2 5/8 to 13 1/8, however, ater the brokerage Olde Discount issued a “buy” rating for the maker of telecommunications products.
In foreign markets, Tokyo’s Nikkei-225 index added 63.11 points to 16,903.49 on Tuesday. But in afternoon trading today, the Nikkei was off 574.76 points to 16,328.73, resuming its downward trend on fears of a further unraveling of the troubled Japanese economy.
In London, the FTSE-100 index closed unchanged at 3,237.3. Frankfurt’s DAX average eased 3.34 points to 2,115.46.
Fed Vice Chairman Mullins’ remarks about the need for the Fed to be vigilant about inflation caused a spike in interest rates early in the day, but buyers returned to the bond market later.
By the close, the 30-year Treasury bond yield was at 6.16%, unchanged from Monday’s close.
Traders said some of the late buying was spurred by release of the weekly Johnson-Redbook report on chain store sales, which showed a smaller than expected increase in retail sales last week.
That helped temper some investor concerns that the economy is accelerating at a rate that will prompt the Fed to tighten monetary policy, analysts said.
January crude oil futures added 13 cents to $14.70 a barrel, stabilizing after Monday’s big drop. But analysts said there was nothing on the horizon to suggest higher prices.
OPEC President Abdullah Attiyah of Qatar dashed any hope for an emergency meeting or any reduction of OPEC output.
Elsewhere, near-term gold futures rose $1.50 to $377.40 an ounce on New York’s Comex; silver jumped 8.9 cents to $4.91 an ounce.
Market Roundup, D6