Dow Edges Up 0.56 to 3rd Straight Record Close
Market Overview
* Blue-chip stocks pulled off a late surge Wednesday to eke out a slight gain and close at a third straight record high. Smaller stocks also posted gains, and London stocks hit a new record high.
* A key indicator of commodity inflation hit a three-year high, propelled by higher precious metal prices and rebounding energy markets.
* Treasury bond yields finished slightly higher in quiet year-end trading.
Stocks
The Dow Jones industrial average ended up 0.56 point to close at a record 3,794.33. Wednesday’s new high followed the records set Tuesday with a 0.84-point gain and Monday with a steep 35-point rise.
Analysts said the overall market showed some weariness after Monday’s steep rise in the Dow, reflected in the fractional advances on Tuesday and Wednesday.
There also appeared to be some hesitancy in the market in the face of the psychologically significant 3,800 level on the Dow, they said. “It seems to me that it’s just taking a breather after having a fairly strong early push in the week,” said Bob Walberg, market analyst at MMS International.
Two strong economic reports failed to enliven stocks. The Commerce Department offered an upbeat economic outlook for 1994, reporting its index of leading economic indicators rose 0.5% in November. The housing sector also displayed continued vitality, with sales of existing homes rising 2.9% in November from the previous month, according to the National Assn. of Realtors.
Small stocks began to show signs of a new rally, analysts said, with the Nasdaq composite index jumping 3.92 at 768.48.
NYSE volume totaled 269.3 million shares, up from 200.9 million shares Tuesday. A large chunk of that volume came from heavy trading in two stocks, which analysts said was due to complex strategies where big investors buy stocks to collect dividends.
SCEcorp., the holding company for Southern California Edison, was the most active issue on the NYSE, down 1/2 at 21 on extremely heavy volume of 40.8 million shares. SCEcorp goes ex-dividend today.
Ameritech, the Chicago-based Baby Bell, was unchanged at 79 3/8, the second most active issue with 20.2 million shares changing hands. The stock went ex-dividend on Monday.
Among the market highlights:
* Developing country mutual funds, which had risen to sky high levels in recent days, took a beating as investors took profits. India Growth Fund fell 2 3/8 at 27 1/2, Korea Fund lost 3 1/4 at 22 5/8 and Chile Fund fell 2 1/2 at 43 7/8.
* Weakness in oil stocks depressed the Dow average, which puzzled analysts since oil prices were slightly higher during the session. Chevron closed down 7/8 at 88 and Exxon finished down 3/8 at 63 5/8, recovering from earlier losses.
* Intel lost 7/8 at 63 1/8 and Advanced Micro Devices fell 3/8 at 17 3/4. A federal appeals court advanced Intel’s lawsuit that charges Advanced Micro Devices with illegal copying of computer chips.
* UAL ended off 2 1/8 to 146 as Merrill Lynch downgraded its rating on United Airlines’ parent. Other airline stocks were weak, with American Airlines parent AMR dropping 1/2 to 67 3/8 and Delta Air Lines, which was downgraded by Prudential Securities, falling 1 to 54 5/8.
Overseas, foreign markets closed mostly higher. In London, shares shot to record closing highs. The Financial Times 100-share index jumped 49.7 points, or 1.46%, to a new high of 3,462.0. In Frankfurt, the DAX 30-share index lost 28.12 at 2,214.70.
In Tokyo, stocks ended higher as the Nikkei 225-share index closed up 140.82 points at 17,272.03. In Hong Kong, stocks ended sharply lower as profit-taking whittled away some of Tuesday’s 530-point surge. The blue-chip Hang Seng Index closed down 120.45 points at 11,449.77.
Commodities
The Commodity Research Bureau’s index of 21 futures, a closely watched inflation barometer, gained 1.18 points to a new three-year high of 226.56.
Strong copper, cotton and lumber prices contributed to the jump in the index, which could reflect a pickup in demand and prices in the economy.
“The strength in the industrial commodities would imply an increase in economic demand, which in turn, could create inflationary pressures,” said Rusty Vanneman, market analyst with Pegasus Econometrics.
Hans Kashyap, president of Analytics Research Corp., said the CRB got a big boost from oil prices Wednesday, which were rising off recent five-year lows.
Crude oil for February delivery closed 33 cents higher at $14.44 a barrel on the New York Mercantile Exchange.
On the New York Commodity Exchange, gold for current delivery closed at $390.70 an ounce, up $3.10 from Tuesday.
Other Markets
The yield of the Treasury’s main 30-year bond rose to 6.24% from 6.23% on Tuesday.
Analysts said the bond market had little reaction to the government economic data, which are merely the latest to show economic improvement.
The dollar rose smartly against the German mark and other European currencies Wednesday after a burst of dollar buying in Europe drove the U.S. currency through key levels.
In New York, the dollar finished at 1.7274 German marks, up from 1.6990 Tuesday, and at 111.78 yen, up from 111.38 yen.
Market Roundup, D6
