Dow Hits 4th Straight Record Close on Investors’ Rosy Economic Views : Markets: Expectations of steady growth and low inflation fuel U.S. buying trend. Political fears undercut Mexico’s Bolsa.
U.S. blue-chip stocks zoomed to new highs on Monday, pulling the broad market upward as investors acted on their increasingly rosy view of the American economy.
Meanwhile, some recently red-hot Third World markets continued to slide, led by the Mexico City market, which plummeted more than 6% in the aftermath of spreading civil unrest over the weekend.
On Wall Street, the Dow Jones industrial average leaped 44.74 points to a record 3,865.51 in heavy trading, eclipsing a previous peak of 3,820.77 set last Friday.
Among broader market indexes, the Standard & Poor’s 500 index also hit a new high, as did the New York Stock Exchange composite index.
Smaller stocks surged as well. The Nasdaq composite index of 4,000 mostly smaller issues jumped 3.75 points to 786.69, just below the all-time high of 787.42, set last Oct. 15.
Analysts say the wave of money that has poured into U.S. stocks over the last few weeks is from investors betting on a healthy economy in 1994, without a significant increase in inflation or interest rates.
“This bull market, which started more than three years ago, shows no signs of letting up,” said Charles Blood, director of financial market analysis at investment firm Brown Brothers Harriman & Co.
“The bottom line is that there is a growing confidence in the economy and in corporate earnings, as well as a good outlook for inflation,” said Alfred Goldman, analyst at brokerage A. G. Edwards & Sons in St. Louis.
Industrial stocks, which should have the most to gain from an improving economy, were once again the market leaders on Monday, as they have been since fall.
General Motors, for example, leaped 1 3/8 to a record 59 1/4. Other industrial leaders were farm equipment maker Deere, up 2 3/4 to 76 5/8; chemical giant Monsanto, up 2 1/4 to 77 1/8; and forest products company Weyerhaeuser, up 1 1/2 to 48 1/4.
Overall, rising stocks outnumbered losers 13 to 8 on the NYSE, as volume remained heavy at 319.49 million shares.
Since Dec. 31, the Dow has advanced 111.42 points, or nearly 3%. Experts say the rally has been partly fed by a seasonal increase in the amount of cash held by big investors such as pension funds, which have quickly turned around and pumped those funds into stocks.
Friday’s government report of a smaller-than-expected increase in the number of jobs nationwide in December helped the stock market’s bullish tone, Wall Streeters say: Many investors believe that the best possible backdrop for the stock market is a moderately growing economy in which interest rates and inflation remain low.
U.S. stocks also may be getting unwitting help from Third World stock markets, many of which stumbled over the last week after dramatic rallies in 1993.
As investors pull funds from what are perceived to be overpriced foreign markets, some of that money may be flowing into U.S. stocks because they’re viewed as safer issues, analysts say.
On Monday, for example, the Mexico City stock market’s Bolsa index plunged 165.92 points, or 6.32%, to 2,459.11, as the 10-day-old peasant insurgency in southern Chiapas state apparently sparked car bombings in Mexico City.
Profit-takers also slammed stocks in Bangkok, Manila and Seoul. In Hong Kong, the Hang Seng index rose 365.46 points to 11,366.94 Monday, but at midday today it was off 226.41 points.
For U.S. stocks, a major test of the bull market’s resiliency will come over the next few weeks, as fourth-quarter corporate earnings reports are released. Investors are expecting hefty gains, thanks to the economy’s rapid growth in the last quarter.
Among Monday’s highlights:
* Industrial stock winners included Ford, up 2 5/8 to 67 1/4; Chrysler, up 1 5/8 to 58 3/4; Superior Industries, up 1 1/8 to 45 5/8; Alcoa, up 1 7/8 to 74 1/8; Eaton, up 2 7/8 to 53 3/4; Ingersoll-Rand, up 1 to 41; and Dover, up 1 3/8 to 60 3/8.
* Airline and rail stocks followed industrial issues higher. AMR, parent of American Airlines, soared 1 3/8 to 70 7/8, Delta added 1 1/4 to 56 1/4 and Norfolk Southern jumped 1 3/8 to 73.
* Many telecommunications and technology stocks rose on renewed optimism about capital spending for the much-ballyhooed information highway. Oracle Systems, for example, jumped 1 3/8 to 33 1/8 after it won a contract to supply multimedia gear and software to Bell Atlantic, which gained 1/2 to 56 1/8.
Other winners included Newbridge Networks, up 3 to 65; Comcast, up 1 3/8 to 33 3/8; DSC Communications, up 1 3/8 to 67 5/8, and General Instrument, up 7/8 to 60.
* Health-care stocks rose as investors reacted to new signs of consolidation in the industry, with the planned merger between HMOs Takecare and FHP International. Among other medical services, U.S. Healthcare gained 1 5/8 to 58 3/4 and Pacific Physicians jumped 1 3/8 to 26 1/2.
* Telmex slid 1 1/8 to 65 1/2 on the NYSE, as Mexican stocks traded in the United States fell broadly. Other losers were Grupo Tribasa, down 2 to 32; Grupo Radio Centro, off 1 1/4 to 26 3/4; and Coca-Cola Femsa, which fell 1 3/4 to 31 7/8.
In other foreign markets, Toronto stocks posted a new high, with the TSE-300 index surging 32.36 points to 4,453.02. In Tokyo, the Nikkei average continued to rebound, adding 319.43 points, to 18,443.44.
In Frankfurt, the DAX average rose 22.15 points, to 2,233.79, but London’s FTSE-100 index eased 5.4 points to 3,440.6.
Other Markets
Long-term Treasury bond yields closed somewhat higher as investors traded cautiously ahead of inflation figures due out this week.
The 30-year T-bond inched up to 6.24% from 6.22% Friday.
Bond yields had plummeted on Friday on news of slower-than-expected job growth in December. But some investors fear that recent commodity price increases have raised the possibility of a short-term inflation surprise.
The government will report on December wholesale inflation on Wednesday and on December consumer inflation on Thursday.
Elsewhere on Monday:
* The modest, two-week rally in oil prices ended with a bang, as the market gave up hope of OPEC agreeing on production cuts soon. February crude tumbled 65 cents a barrel, to $14.67 a barrel on the New York Merc.
The Middle East Economic Survey reported that, despite the world oil glut, it is highly unlikely that OPEC will push up its scheduled March meeting.
* Gold eased. On the New York Comex, gold for current delivery closed at $385 an ounce, off $1.40 from Friday. Silver closed at $5.04 an ounce, up 3.7 cents.
