Dow Continues Its Upward Trajectory
The Dow Jones industrial average shook off bouts of profit taking to close above 5,400 for the first time ever Thursday as investors kept buying shares for fear of missing out on a still-resilient bull market.
“It’s a continuation of what we’ve been seeing. Everyone keeps saying we’ll have a pullback, and that’s why we’re not getting one,” said Tony Dwyer, chief investment strategist at Josephthal, Lyon & Ross. “Yesterday’s easing gives the Fed the option” to lower interest rates again and is encouraging more buying, Dwyer said.
However, the yield of the Treasury’s main 30-year bond rose to 6.07% from 6.02% on Wednesday.
In setting a record for a fifth consecutive session, the Dow ending up 9.76 points at 5,405.06. The index closed above 5,300 for the first time on Monday, and it has climbed nearly 290 points so far this year.
In the broader market, advancing issues overtook decliners 1,382 to 979 on a very active volume of 461 million shares on the New York Stock Exchange.
The Standard & Poor’s composite index of 500 stocks achieved a fourth record high in as many sessions, closing up 2.44 points at 638.46.
The Nasdaq composite index jumped 9.66 points to 1,069.45, just shy of its record of 1,069.79 set Dec. 4, 1995.
“The bulls are in charge for the very short term,” said Greg Nie, a technical analyst at Everen Securities. “Some investors are speculating on more Fed easings down the road. We’ve had good momentum the past few days, so it would be surprising to get a quick shift to the downside.”
Investors had been snapping up shares in anticipation of the Federal Reserve Board’s rate cuts of Wednesday. Its policy-setting Federal Open Market Committee cut both the federal funds rate and the discount rate by one-quarter percentage point.
Ralph Bloch, chief technical analyst at Raymond James, sees a pause in the technology-heavy Nasdaq index’s rally, even though it seems headed for a record. “We’ve run about 90 points from a January intraday low, and we’ve already used up quite a bit of firepower,” he said.
Gold stocks continued to climb, with the April gold futures contract on the Commodity Exchange of New York surging $5.20 an ounce to $413.70, continuing to approach 5 1/2-year records.
The Philadelphia Stock Exchange’s gold and silver index jumped 6 points or 4.33% to 147. “That was a big breakout,” Nie said. He noted that the index last hit these levels in early 1994.
“At this stage, for a while it’s prudent to have some exposure to gold, but we’re also getting extended in the short term,” Nie said.
But Bloch cautioned that although “gold has been hot, it’s subject to too many acts of God.”
Gold stocks to have set 52-week intraday highs Thursday included Homestake Mining, up 3/4 to 19 5/8, Barrick Gold, up 1 1/2 to 30 7/8, Newmont Gold, up 3 1/4 to 58 1/2, Placer Dome, up 1 1/4 to 29 3/8 and Newmont Mining, up 2 to 58.
Among market highlights:
* Toys R Us rose 1 1/2 to 23 1/2 on news that it will take a $270 million fourth-quarter restructuring charge, close 25 stores and consolidate three distribution centers.
* Some IPOs attracted avid interest. Red Roof Inns rose 1 to 17 and U.S. Satellite Broadcasting, a direct broadcast TV company, jumped 7 3/4 to 34 3/4.
* LSI Logic climbed 4 to 32 5/8. Bear, Stearns & Co. said LSI’s order momentum seems to have picked up in January.
* Netscape shed 13 1/2 to 150 3/4 after reporting fourth-quarter earnings that were a bit better than Wall Street estimates but revenues that fell shy of some estimates.
* Discovery Zone finished down 1 7/8 to 1 1/8; its price had slid as low as 68.75 cents a share during the session, and it was among the market’s most active issues, with 4.7 million shares changing hands. The troubled children’s-recreation company said it is uncertain if it can renegotiate its credit line with lenders.
* IBM rose 1/4 to 109. The Wall Street Journal reported that Fidelity Investments may be behind the recent surge in IBM’s stock.
