FINANCIAL MARKETS : Dow at Record, Dollar Falls on Trade Worries
The stock market maintained its forward momentum Monday, carrying the Dow Jones industrial average to its sixth straight record finish.
The dollar fell against major currencies in profit taking following last week’s rally and amid uneasiness as the United States prepared to announce possible trade sanctions against Japan.
The Dow climbed 6.91 points past the previous record, set Friday, to 4,437.47. Several broader indicators also reached new highs, and the American Stock Exchange surpassed a peak that had stood for 15 months.
“This is a bull market that is still alive and well,” said Alfred E. Goldman, a vice president at A.G. Edwards & Sons Inc. in St. Louis. “The optimistic camp is increasing, but we haven’t seen the type of conditions you normally see at important market tops.”
Retreating interest rates motivated investors to favor equities, as did renewed confidence in the economy.
Among the other record setters: The New York Stock Exchange composite index climbed 1.11 points to 284.01, Standard & Poor’s 500-stock index rose 2.19 points to 527.74, and the Nasdaq stock market composite index added 4.12 points to 863.06. All three also reached highs Friday.
Gainers outnumbered losers by about 3 to 2 on the Big Board, where volume came to 313.91 million shares as of 4 p.m. EDT. On Friday, 358.26 million shares changed hands on the NYSE.
At the American Stock Exchange, the market value index rose 0.55 points to 488.31, which beat the old mark of 487.89 set Feb. 2, 1994, just before the Federal Reserve Board began gradually raising interest rates in an inflation-fighting effort.
One of the most powerful forces behind Wall Street’s prolonged bull run is optimism that the Fed has succeeded in curbing economic activity enough to keep inflation from flaring up. Most investors have come to believe that the central bank’s rate hikes laid the foundation for a so-called soft landing: slower growth accompanied by an insignificant degree of inflation.
Stocks started out the session subdued, with key indicators sticking close to their starting points. But the market managed to overcome its initial lethargy and positive levels prevailed by midmorning.
Analysts said declining interest rates in the bond market encouraged investors. The price of the key 30-year Treasury bond rose about 5/8 point, which cut its yield to 6.94% from 6.99% on Friday.
The prolonged rally on Wall Street was energized last week when long-term bond yields receded below 7% for the first time in more than a year.
Among the market highlights:
* The slide in interest rates benefited banking and other financial stocks. Among the active NYSE issues, Citicorp rose 1 3/4 to 51 5/8.
* Cyclical stocks gained amid a perception that the slowing economy would avoid recession. Ford Motor added 7/8 to 29 3/8, General Motors rose 1 3/8 to 48 and Chrysler gained 5/8 to 44 1/4.
* Profit taking took a toll on several consumer non-durable sectors that had been doing well when doubts about the economy were widespread.
