FINANCIAL MARKETS : High-Techs, Cyclicals Drive Dow Industrials to Close at Record High

Stocks soared to record levels on Wednesday, boosted by ongoing strength in technology issues and plummeting bond yields.

The Dow Jones industrial average rose 46.69 points to close at 4,727.29, up 1% and crashing through its previous high closing of 4,702.73 reached last Friday.

The Dow was up 50 at one point, setting NYSE curbs on certain program trades at 3:11 p.m. “A good portion of leadership stems from technology, but basic cyclicals and transports are helping,” said Jack Conlon of First Albany.

In the broader market, advancing issues led decliners by about 9 to 5 on the New York Stock Exchange, where volume was a heavy 413.58 million shares, well ahead of Tuesday’s 376.78 million.

“The chip stocks are leading the market. The chips are just screaming,” said Philip Orlando, senior vice president of First Capital Advisers.

The strength in computer issues pushed broad market indexes to record highs as well, topping previous records set this past Monday. The Nasdaq Composite index rose 18.41 points to 988.63. It was the Nasdaq’s biggest point gain since April 5, 1994, when it rose 23.54 points.

More impressive was the Philadelphia Stock Exchange’s semiconductor index, which soared 32.49 points, or a stunning 6.23%, to a record 553.59. Frank Gretz, technical analyst at Shields & Co., said the index’s rise was the equivalent of a gain of some 250 points on the Dow.

The NYSE’s composite index rose 2.74 points to 299.93 and Standard & Poor’s 500-stock index rose 6.11 points to 560.89. The American Stock Exchange’s market value index rose 5.15 points to 514.20, above its record of 509.05 set on Tuesday.

“People just keep buying and buying. It all started with Motorola this morning. These high-techs have been going crazy,” said Marty Kearney, a trader at PTI Securities.

The market was surprised by Motorola, which reported a 32% gain in second-quarter earnings after Tuesday’s market close. It rose 7 5/8 to 75 5/8 Wednesday.

More mystifying was a rise in gold stocks, which sent the Philadelphia Stock Exchange’s gold and silver index up 2 to 131 after setting an intra-day record of 132.70. Gold stocks trading at their 1995 highs included Placer Dome and Barrick Gold, Gretz said.

Treasury bond yields fell after news of tame inflation in the South reassured some fixed-income players that the broader inflation rate remains under control.

The stock market got help from bonds, where the 30-year Treasury bond yield fell four basis points to 6.54%, from Tuesday’s 6.58%, pushing its price up 19/32 point, or $5.94 per $1,000 in face value. Yields move in the opposite direction of prices.

Investors reacted to a report by the Federal Reserve Bank of Atlanta that seemed to portray a benign picture of inflation, which tends to erode the value of bonds and other fixed-return investments.

Among Wednesday’s highlights:

* Leading the Dow average were cyclical issues that are sensitive to economic changes. International Paper rose 2 3/8 to 89, and Alcoa added 2 1/8 to 55 7/8. Both companies have reported strong second-quarter earnings.

Among other technology issues: Advanced Micro Devices rose 4 1/8 to 45 5/8; Texas Instruments rose 8 7/8 to 153 3/8; National Semiconductor rose 1 1/2 to 30 7/8, and Micron was up 4 3/4 to 60 3/4.

* Bank stocks rose after the announcement of the merger of two Midwest powerhouses, First Chicago Corp. and Detroit-based NBD Bancorp Inc. First Chicago closed 7/8 higher at 61 1/2. NBD rose 1 7/8 to 34 3/8.

* Elsewhere, First Interstate added 1 5/8 to 83, Bank of Boston climbed 3/4 to 38 5/8 and Republic New York Corp. gained 1 1/8 to 57.

* Among paper and lumber issues, Champion International gained 1 7/8 to 58 1/8, Weyerhaeuser Co. climbed 1 3/8 to 49 3/4, Kimberly-Clark added 1 1/4 to 60, Willamette Industries surged 2 3/4 to 65 1/2 and Union Camp advanced 2 1/4 to 60 3/8.

Transportation companies climbed as investors anticipated rising profits, increased freight shipments and more mergers and acquisitions. The Dow Jones Transportation Index rose 13.04 points to 1,877.94.

* Norfolk Southern rose 1 5/8 to 71 7/8, CSX gained 2 5/8 to 84 3/4 and Roadway Services added 1 3/4 to 52 1/2.

* Revco DS fell 2 7/8 to 20 1/2, on market talk that Roulston Research cut the company’s earnings estimates and Robertson-Humphrey plans to do the same, traders said. Revco said it sees strong financial performance.

* Compuware shed 7 3/4 to 22 3/4 after it forecast lower quarterly earnings. Soundview cut its rating and estimates.

* Xcellenet fell 5 3/4 to 17 after forecasting quarterly results that were below expectations.

Overseas, London’s Financial Times 100-share average closed 13.4 points off at 3,450.6, while Frankfurt’s 30-share DAX average dipped 2.81 points to 2,199.09. In Tokyo, the Nikkei 225-share average ended up 17.55 at 16,605.74.

Mexico’s Bolsa index closed at 2526.04, up 23.03 points.

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Nasdaq Mania

The Nasdaq market of mostly smaller-company stocks has been soaring this year, let by technology shares. How specific industry stock indexes within Nasdaq have jumped since Dec. 31: Computer: 56.4% Composite: 31.5% Transport: 26.7% Bank: 25.7% Telecom: 21.3% Insurance: 14.9%

The Nasdaq Since Jan. 1

Weekly closes of the Nasdaq composite, except latest:

July: 988.63

Sources: Nasdaq, Bloomberg Business News