Dow Pushes to Another Record High Above 4,000 : Economy: Showing manufacturing’s vigor, orders for durable goods rose 0.6%, contrary to the 1% decline analysts predicted.
Stocks managed to push higher to another record close Friday, the second straight day the Dow Jones industrial average closed above the 4,000 milestone, despite early hesitation due on a surprisingly strong economic report.
Contrary to analysts’ predictions of a 1% or more decline, orders for durable goods--items expected to last at least three years, including everything from washing machines to tanks-- rose 0.6% to a seasonally adjusted $163.1 billion, up $1 billion from December.
The month’s rise was the third in a row and underlined the manufacturing sector’s vigor over the past 1 1/2 years.
Analysts said the report showed that strong business spending was powering the economy forward, even though consumers were growing wary about buying some items like new cars.
Bond yields rose early in the day on the news but eventually retreated, paving the way for stocks to rebound.
The market spent most of the session wobbling between the red and the black columns as buyers battled sellers for control, but a late rally left the Dow 8.41 points higher at 4,011.74.
In the broader market, advancing issues narrowly led decliners, by 1,127 to 1,048 on the New York Stock Exchange. Big Board volume totaled 303.42 million shares, down from 394.68 million Thursday.
The NYSE’s composite index rose 0.62 point to 264.86. The Standard & Poor’s 500-stock index added 1.20 points to 488.11. The American Stock Exchange’s market value index rose 1.32 point to 450.67.
But Nasdaq composite index of mostly smaller issues fell 0.27 point to 791.08.
“The path is not completely clear for a major run to the upside here, and today’s actions seem to underscore that.”
The Dow traded in a narrow band all day as investors struggled to assess its jump into uncharted territory. Some analysts said the market had gotten ahead of itself.
“Value investors must be wondering how much further we can go on this particular run,” said James Solloway, market analyst at Argus Research.
Treasury bond yields ended moderately lower as investors bought Treasury securities ahead of the weekend, helping the market recover from the early rise.
The long bond’s yield closed at 7.52%, down from Thursday’s 7.54%, while its price, which moves in the opposite direction, rose 3/16 point, or $1.88 cents per $1,000 invested.
The bond’s yield rose sharply following the release of the durable goods report.
But yields staged a remarkable rally late in the session as dealers squared up positions ahead of the weekend. Some observers said investors apparently decided that the durable goods report did not change the market view that the economy is slowing down.
The dollar didn’t fare as well as the stock and bond markets, slumping against the mark Friday as investors worried by political and financial troubles in Europe fled to the German currency, which surged to record highs against the Spanish peseta and Italian lira.
The U.S. currency strengthened against the Japanese yen after the Bank of Japan intervened in Asian foreign exchange markets, buying dollars and selling yen, in an effort to slow the rise of the Japanese currency. That rise threatens to undermine Japan’s nascent economic recovery by dampening the country’s exports.
In New York, the greenback was quoted at 1.462 marks, down from 1.468 Thursday. It also was changing hands at 97.00 yen, up from 96.71.
Despite the advance against the yen, which also declined against the mark as investors sold Japanese assets and pumped money into Germany, the dollar dropped nearly a half yen from the day’s highs in afternoon trading.
It was also a rough day for Mexico’s new peso which dropped 19 centavos to close at 5.85-5.90 against the dollar.
Among Friday’s highlights:
* Consumer non-durable issues, which tend to perform better in times of economic uncertainty, led the market higher at the close. The Dow index components were led by Philip Morris, up 1 1/4 to 60 3/4; J.P. Morgan, up 1 1/8 to 64 1/8, and Coca-Cola, up 3/4 to 54 3/4.
* Deep cyclical stocks, which usually fall during hard economic times, were lower. Alcoa lost 1 1/8 to 81 and Caterpillar declined 1 1/4 to 51 3/4.
* Telefonos de Mexico fell 1/2 to 28 3/8, Grupo Televisa fell 1 to 16 1/2 and Grupo Tribasa fell 3/4 to 6 1/8 in sympathy with Mexican stocks which took another beating Friday along with the peso. The Bolsa index ended the day at 1,553.89, a drop of 57.84 points, or 3.59%. The market dived 15.1% this week.
Sybase was down 2 1/8 at 42 3/8. The investment firm of Wessels, Arnold & Henderson lowered its earnings estimates on the company.
* Isomedix fell 2 1/2 to 13 5/8 after reporting a drop in fourth-quarter profits.
* Among initial public offerings, Sola International Inc., a maker of eyeglass lenses, rose 1 from its starting price of $16 1/2. Speedway Motorsports Inc., which owns the Charlotte Motor Speedway and Atlanta Motor Speedway, gained 1 from its pricing at $18.
In other foreign markets, fresh uncertainty swept Tokyo’s financial markets, with the stock market’s key index hitting a 13-month low and the yen approaching a new record post-World War II high against the dollar.
The widely watched 225-issue Nikkei average fell 357.08 points, or 2.0%, to close Friday at 17,472.94. That was its lowest finish since 17,369.74 on Jan. 4, 1994. The Nikkei is down 11.4% so far this year.
London’s Financial Times 100-share average fell 11.6 points to 3,037.7, while Germany’s DAX average finished at 2,118.64, up 0.40 point. In Hong Kong, however, the Hang Seng index rose 242.54 points to end at 8,218.95.
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Durable Goods
New orders, in billions of dollars: (chart)
1995: $163.1
Source: Commerce Department
