FINANCIAL MARKETS : Stocks Surge; Dow Nears Its ’94 High
Stock prices closed with solid gains Monday, making a renewed assault on record highs as investors took advantage of Wall Street’s bullish momentum.
The Dow Jones industrial average finished up 9.09 points at 3,937.73, nearing its record closing high of 3,978.36 reached Jan. 31, 1994. In the broader market, advancing issues outnumbered decliners by about 3 to 2 on the New York Stock Exchange, where volume was heavy at 325.66 million shares, down from Friday’s unusually brisk turnover of 441 million shares.
In advancing for a fifth straight session, the market withstood selling by investors eager to cash in recently amassed profits.
Cyclical stocks were targeted by profit takers who acted on the assumption that slower economic activity could mar the earnings potential of companies especially sensitive to shifting business conditions.
Broader indicators of stock market activity performed better than the narrow Dow. The NYSE composite index rose 1.31 points to 261.75, and Standard & Poor’s 500-stock index increased 2.50 points to 481.14. The American Stock Exchange market value index added 0.69 point, rising to 443.12.
Gauges comprising a wider array of issues also gained. The Nasdaq Stock Market composite index rose 6.79 points to 778.85.
Given the market’s gusto late last week, including a 57.87-point surge in the Dow on Friday, analysts had expected stocks to take a rest as investors collected their winnings.
But when the buying persisted Monday, analysts concluded that the market maintained sufficient strength to build on last week’s rally.
Friday’s surge was triggered by the government’s jobless data for January, which hinted that the economy may be slowing and left many on Wall Street thinking the Federal Reserve Board could be nearing the end of its cycle of interest rate hikes.
Meanwhile, in the bond market, yields rose as investors sold their holdings for a profit after last week’s strong rally and made room for $40 billion in new issues to be auctioned this week.
The Treasury’s key 30-year bond rate rose to 7.65% from a five-month low of 7.62% on Friday. The long bond’s price, which declines when yields rose, fell 7/32 point, or $2.19 per $1,000 invested.
Shorter-term maturities prices also dipped in modest trading as no significant economic news hit the market ahead of the government’s auction of new notes.
Among Monday’s highlights:
* Michigan National soared 12 7/8 to 101 5/8 after agreeing to be bought by Australia’s largest bank for about $1.5 billion.
* One weak spot was cyclical stocks as concern mounted that slower economic growth could impair profits at these companies. Aluminum Co. of America dropped 3 7/8 to 80, Reynolds Metals fell 2 1/4 to 51 1/2 and Procter & Gamble rose 1 1/2 to 66 1/2.
* Amgen rose 3 to 65 7/8 amid renewed takeover speculation.
* Harley-Davidson lost 1 1/4 to 26 1/4 after saying its operating margins at its motorcycle business may drop this year.
* H.J. Heinz said it has signed a deal with Quaker Oats to acquire all of Quaker’s U.S. and Canadian pet food businesses for $725 million. Heinz rose to 1 1/4 to 40 7/8 and Quaker ended flat at 34.
* Walt Disney gained 1/2 to close at a record 52 1/2, reflecting investor confidence that the company has weathered the worst of its management turmoil and theme park problems.
* Boeing rose 3/4 to 47 1/8. The stock has been a focus of attention since last week, when the company announced production and job cuts.
* McDonnell Douglas was down 1 1/8 at 52 7/8 after the Wall Street Journal reported that the company may temporarily halt production of the MD-11.
Overseas stocks closed higher. Tokyo’s 225-share Nikkei average rose 128.26 points to 18,667.23, while Hong Kong’s Hang Seng index soared 418.88 points, or 5.60%, to finish at 7,897.80.
In Frankfurt, the DAX 30-share average closed up 31.7 points at 2,089.69; London’s FTSE-100 average gained 2.3 points to 3,062.0.
The dollar, meanwhile, mostly strengthened, building on its gains from last week based on evidence that healthy U.S. economic growth isn’t producing much domestic inflation.
In New York, the dollar closed at 1.531 German marks, up from 1.527 on Friday. It rose to 99.38 Japanese yen, off from 99.77 on Friday.
Elsewhere, natural gas futures prices rose sharply for a fourth straight day on the New York Merc as a cold snap boosted demand for the heating fuel.
Natural gas for March delivery surged 5.6 cents to $1.538 per 1,000 cubic feet, the highest daily settlement for near-term deliveries since Jan. 5. The contract has risen 20.1 cents, or 15%, since last Tuesday.
Market Roundup, D8
Interest Rates:
30-year T-Bond: 7.65%
1-year T-Bill: 6.80%
