FINANCIAL MARKETS : Stock Rally Pushes Ahead; Nasdaq, S&P; at New Highs
The stock market’s rally pushed ahead on Monday despite scattered weakness in some technology issues and in airline stocks.
The resurgent dollar also edged higher, and early today in Tokyo crossed the 100-yen level again.
On Wall Street, the Dow Jones industrial average gave up a 21-point midday rally to close up just 4.22 points at 4,704.94.
But the broad market was stronger. The Nasdaq composite index gained 6.53 points to a record 1,066.56, and the blue-chip Standard & Poor’s 500 index also hit a record, adding 1.23 points to 573.91.
Rising stocks outnumbered losers by 12 to 11 on the Big Board and by 18 to 17 on Nasdaq. Trading volume was modest.
Although the Dow continues to struggle to top its record high of 4,736.29 set on July 17, “We’ve got a shot at a record on the Dow within the next week or two,” said Thom Brown, analyst at Rutherford Brown & Catherwood.
“I don’t see any real trouble spots [in the overall market] and the lack of any major trouble spots means the Dow will catch up with the rest of the market,” he said.
Analysts remain optimistic about the economy’s growth prospects as interest rates ease worldwide.
Long-term bond yields closed slightly higher on Monday but remain near eight-week lows. The 30-year Treasury bond yield finished at 6.59%, versus 6.58% on Friday.
The bond market will be tested this week by August inflation reports. Wholesale inflation data is due today, and consumer inflation data is due on Wednesday. Bond investors are expecting inflation to remain extremely low to justify current yields.
Meanwhile, the dollar continued to gain ground in the wake of Japan’s latest interest-rate cut on Friday. The dollar rose to 99.98 yen in New York from 99.70 on Friday. And early today in Tokyo the dollar was trading at 100.45 yen.
But the dollar eased against other major currencies.
Among Monday’s highlights:
* Industrial issues that would benefit from a continuing economic expansion led the rally. Alcoa gained 1 1/2 to 59 3/4, Dupont rose 1 1/4 to 69 1/2, United Technologies added 1 1/8 to 84 7/8, B.F. Goodrich jumped 1 1/2 to 62 5/8 and FMC Corp. was up 1 3/8 to 78 5/8.
Also, Potash jumped 5 1/2 to 64 1/2 after agreeing to buy the phosphate assets of Occidental Petroleum for $280 million. Oxy added 3/8 to 22 3/4.
* Some consumer growth stocks also saw renewed buying. Procter & Gamble jumped 1 1/2 to 71 1/8, Hershey added 3/4 to 61 3/8 and Amgen surged 2 1/16 to a record 52.
* Tech stocks were mixed. IBM sank 2 1/2 to 96 3/8 on a negative review in Barron’s magazine. Also, Western Digital plunged 2 5/8 to 18 on a weak earnings forecast.
On the plus side, Peoplesoft jumped 3 1/2 to 79 1/2, Cisco Systems gained 1 3/8 to 71 3/4, Oracle rose 1 3/8 to 45 1/4, Micron Technology leaped 4 1/2 to 94 3/8 and Microsoft was up 2 1/8 to 97 5/8.
* Airline stocks fell back on fresh fare-war concerns. Alaska Air slumped 2 5/8 to 17 1/4, Southwest dropped 7/8 to 25 3/4 and Delta fell 2 to 76.
In foreign trading, London’s FTSE-100 index closed down 5.2 points at 3,549.3.
In Tokyo, the Nikkei 225-share average rose 206.56 points to 18,486.11, adding to Friday’s big advance after the interest-rate cut.
Mexican stocks closed lower in sluggish trading. The Bolsa index fell 18.36 points to 2,603.85.
In commodities markets, coffee prices fell for the fifth straight session on an unexpectedly large Colombian crop estimate and prospects for rain in drought-hit Brazil. The most-active December contract touched a two-month low of $1.336 a pound at the Coffee, Sugar and Cocoa Exchange before closing off 3.05 cents at $1.338.
