Dow Breaks Through 3,800 to Another Record; Yields Fall
Market Overview * A burst of buying in blue-chip stocks propelled the Dow Jones industrials through the 3,800 barrier to another record close Thursday, but the market overall gave an uninspiring performance.
Hong Kong stocks suffered deep profit taking, and the selloff continued early today, spreading to other Asian markets.
* Bond yields slid after Labor Secretary Robert B. Reich suggested that today’s December employment report may be less robust than market expectations.
Stocks
The Dow closed up 5.06 points to 3,803.88, a new high and the first close over 3,800.
But the Dow was boosted by a handful of heavy-industry stocks. The broad market, in contrast, looked relatively weak: Winners just slightly edged losers on the New York Stock Exchange, though trading volume remained heavy at 368 million shares.
The Nasdaq composite index of mostly smaller stocks rose 2.36 points to 780.41, and winners topped losers by 14 to 12--a better showing than the NYSE.
Analysts said the Dow’s slow push to new highs reflects investors’ increasing skittishness about overpaying for stocks.
“The interesting thing about the market was that it was such a mixed bag today. It reflects a very selective market which emphasizes cyclical stocks that benefit from an improving economy,” said Michael Metz, analyst at brokerage Oppenheimer & Co.
Still, the market’s ability to advance this week is a bullish sign for the year, some analysts contend: The market’s direction in the first week of January, and in January overall, often tells whether stocks will have an up or down year.
So far, that barometer is signaling a rough year in the Hong Kong market: The Hang Seng index plummeted 792.5 points, or 6.5%, Thursday to 11,374.5, as profit takers hit the market after its extraordinary rally in 1993.
The selloff continued today: The Hang Seng was off 676.55 points, or 6%, to 10,697.95 at midday. “It is a question of altitude sickness,” said Nial Gooding, an associate director at Barclays de Zoete Wedd (Asia). “It takes a while to adjust to the rises, and people are being a bit queasy up here.”
The Hong Kong selling spilled into other recently hot Asian markets. In late-morning trading today, Singapore shares were off 3.4% and Kuala Lumpur shares were down 4.7%.
Among Thursday’s U.S. market highlights:
* Industrial stocks continuing to gain on optimism about the economy included Allied Signal, up 1 to 77 1/2; Bethlehem Steel, up 1/2 to 20 1/2; Kodak, up 3/4 to 46 3/8; GE, up 7/8 to 103 7/8; Varity, up 1 1/2 to 45 7/8, and Kennametal, up 2 1/4 to 45 7/8.
* Transportation stocks followed industrials higher. Burlington Northern gained 1 3/4 to 58 3/4, Conrail jumped 1 3/8 to 67 3/4, Federal Express surged 1 5/8 to 72 1/2 and Union Pacific was up 1 3/4 to 66 3/8.
* Many technology issues rallied, led by software firm Adobe Systems, after it said earnings nearly doubled in the recent quarter. Adobe surged 4 to 26 1/2, Hewlett-Packard gained 2 3/8 to 81 5/8, Microsoft rose 2 3/8 to 84 5/8, Lotus added 1 1/8 to 58 1/8 and BMC Software shot up 4 1/4 to 52 1/2.
* Retail stocks were mixed, reacting to December sales reports. Dayton Hudson rose 1 to 68 3/8, Gap gained 3 1/8 to 41 1/2 and Limited added 7/8 to 18, but Nordstrom eased 5/8 to 32 1/4 and Wal-Mart stumbled 7/8 to 24 5/8.
* Utilities were broadly lower for a second day. Texas Utilities fell 2 1/4 to 40 3/8 after it was downgraded by brokerage Kidder Peabody. The Dow utility index sank 1.3%.
* Copley Pharmaceutical sank 8 at 29 1/2 after it warned of a heavy financial impact from a drug recall.
In other foreign markets, Mexico City’s Bolsa index closed at a new high in a volatile session, up 26.86 points to 2,684.17.
Markets also gained ground in London, Paris and Tokyo.
Other Markets
Labor Secretary Reich’s downbeat comments regarding the December jobs report due today surprised many economists who had forecast a big jump in employment.
Though Labor Department officials said Reich could not know what the actual figures are and was just making an estimate, traders bought bonds on the expectation that slower job growth will allay concerns that the economy might overheat in the near term.
At the close, the yield on 30-year Treasury bonds was at 6.34%, down from Wednesday’s 6.40%.
In other markets:
* Gold for current delivery fell $1.90 to $389.20 an ounce on the Comex. But silver bounced up 5.4 cents to $5.11.
* 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.
* February crude oil futures inched up 8 cents to $15.42 a barrel, the fourth straight daily gain.
Market Roundup, D6
