FINANCIAL MARKETS : Dow Continues Its Record-Setting March
The Dow Jones industrial average set a record high for the seventh time in eight sessions, closing just shy of the historic 5,000 level on Friday.
The closely watched blue-chip average climbed 20.59 points to 4,989.95, easily topping Thursday’s record and pushing past a 30% gain for 1995. It was the Dow’s 59th record close for the year.
The Dow got as high as the 4,996 level during the day as investors brushed aside the continued budget fight in Washington to bet that interest rates will soon be lowered.
The Nasdaq composite index rose 0.55 point to 1,045.03.
There was a powerful upward bias to the trading all day, fueled by the market’s current momentum and the continued flow of cash into stock mutual funds, which has dipped a little but is still positive, said Eric Miller, market strategist at Donaldson, Lufkin & Jenrette. “There is a perceived demand by most fund investors that they have to stay fully invested” in order to participate in the market’s gains. “They can’t build cash, and if they sell something, they have to buy something else.”
Investors shed some speculative issues, in part because of nervousness about the Washington budget standoff, which was far from resolved by the close of trading Friday.
Treasury yields moved little as technical trading strategies dominated an otherwise quiet session. The mood was quieted by the absence of economic releases, a result of the federal government shutdown that was in its fourth day Friday.
The yield of the Treasury’s main 30-year bond edged up to 6.23% from 6.22% late Thursday. Yields of shorter-term securities declined slightly.
Mexico City stocks soared to their highest levels in a month as the peso got stronger, indicating to many investors that company earnings may be headed higher. The Bolsa index rose 86.98 points, or 3.84%, to 2349.46, its highest level since closing at 2351.57 on Oct. 19. The peso closed at 13.1 U.S. cents, its highest since closing at 13.24 cents on Nov. 10.
On Wall Street, stocks began climbing early in the session, and they added steadily to their gains all day, ignoring a dip in bonds and a mixed dollar. Some stock traders and analysts had expected a more volatile session, given the double expiration Friday of options and futures contracts. But the “double witching” factor did not seem to carry much influence.
The real test of the market’s strength will come next week, traders said, when the technical bias of the expiration is not an issue.
Among market highlights:
* Uncertain how the budget fight would end, investors sold the more speculative issues in their portfolios. Technology issues, for example, were sold aggressively, with IBM losing 1/2 to 95 1/8; Micron Technology down 1/8 to 55 1/8; Intel off 1/8 at 62 5/8, and Microsoft down 2 1/2 to 87 3/8.
Hewlett-Packard slid 4 3/4 to 88 1/2 after the computer maker said that although its fourth-quarter profit had jumped 42%, higher expenses are squeezing profit margins.
* The Dow industrials were led higher by consumer stocks such as Procter & Gamble, up 1 1/8 to 89, and Disney, up 1 1/2 to 59 1/4.
* Oil stocks, which often move counter to the economy, were higher, with Exxon gaining 1 1/2 to 79 3/8 and Texaco adding 1 1/8 to 71.
* Estee Lauder closed at 34 1/2, up from an original pricing of 26. The family-controlled cosmetics concern went public with an initial offering of 15.3 million shares.
* Time Warner rose 1 3/8 to 39 3/4 a day after announcing a major shuffling of top entertainment personnel, including the ousting of music chief Michael Fuchs.
In overseas trading, Tokyo’s 225-share Nikkei index closed up 211.64 points, or 1.18%, to 18,151.16, up 307.60 from last Friday. London’s FTSE-100 ended 1.6 points lower at 3,609.2, a gain of 85.8 from last Friday.
