FINANCIAL MARKETS : Dow Breaks Through 3,800 to Another Record; Yields Fall
Market Overview * A burst of buying in blue-chip stocks propelled the Dow Jones industrial average through the 3,800 barrier to another record high close Thursday, but the rest of the market gave an uninspiring performance.
* Bond yields plunged, pushing prices sharply higher after Labor Secretary Robert B. Reich suggested that Friday’s key jobs report may fall below market expectations. The dollar also rebounded against most currencies.
Stocks
The Dow Jones industrial average gained 5.06 points to close at 3,803.88, beating Wednesday’s record close of 3,798.82, on active volume totaling 367.88 million shares.
Advancing issues outnumbered declines on the Big Board by fewer than 20 stocks.
Most broadly based market measures receded despite the strength in cyclicals. The New York Stock Exchange composite fell 0.31 to 259.00 and the Standard & Poor’s 500-stock index dipped 0.43 to 467.12.
Among other market indicators, the Nasdaq composite gained 2.36 to 780. The American Stock Exchange market value index rose 0.21 to 479.00.
The bond market’s strength provided a positive backdrop for stocks, as did a perception that economic growth may have moderated to a slow enough pace to keep inflation and interest rates from rising substantially.
Investors favored cyclical issues, which are stocks of companies sensitive to economic changes.
Analysts did not attach too much importance to the Dow industrials reaching another new high. They noted that the advance occurred during a so-so session in which many stocks had big losses.
“Personally, I don’t think going through 3,800 is particularly significant,” said Will Weinstein, senior partner at Genesis Merchant Group.
Among the market highlights:
* Heading the active issues on the NYSE was Circuit City, which skidded 4 1/2 to 17 5/8 as nearly 7.6 million shares changed hands. The company said an acceleration in its expansion program will cause its earnings to show no material growth in 1995.
* Best Buy, which competes with Circuit City, tumbled 7 1/2 to 39 3/4.
* Kmart, which previewed its mediocre results Wednesday in announcing plans to restructure, dropped 1 1/2 to 19 1/2.
* Borden was down 1/2 to 15 3/8 on heavy NYSE volume of more than 4.6 million shares.
* Texas Utilities fell 2 1/4 to 40 3/8 after it was downgraded to “under perform” from “neutral” by Kidder Peabody.
* On the Nasdaq, Copley Pharmaceutical was off 8 at 29 1/2. The drug company’s stock tumbled after it gave an estimate of the financial impact from the voluntary recall of albuterol vials.
* Adobe Systems rose 4 to 26 1/2 after it approved the buyback of 2 million shares.
Overseas, stocks were mixed. Mexico City’s Bolsa index closed at a new high in a volatile session aided by “buy” recommendations for Telefonos de Mexico and Vitro by U.S. analysts. The key index gained 26.86 points, or 1.01%, to end at 2,684.17.
Markets moved ahead in London, Paris and Tokyo but fell in Frankfurt.
Other Markets
In the bond market, the Treasury’s main 30-year bond yield finished the day at 6.34%, down from Wednesday’s 6.40%. But shorter-term bond yields were down somewhat less.
Reich’s comments regarding the December jobs report surprised many economists who had forecast a big jump in employment. Many traders bought bonds on the remarks because they speculated that the head of the agency releasing the data may have had some inside knowledge.
The sentiment generated some bullishness ahead of Friday’s data because slower growth generally means low inflation levels. Inflation can diminish the value of fixed-income investments such as bonds.
The bond market managed to hold on to its initial price gains that followed Reich’s remarks. One reason was the subsequent release of weekly data on first-time unemployment claims.
Elsewhere:
* The dollar closed in New York at 112.65 Japanese yen, down from Wednesday’s 112.90, and at 1.745 German marks, up from 1.741.
* On the New York Comex, gold for current delivery closed at $389.20 an ounce, down $1.90 from Wednesday. Silver bounced up 5.4 cents to close at $5.109 an ounce.
Market Roundup, D6
