Dow Inches to 5th Straight Record High
Stocks ended Friday’s whirlwind session barely higher, but enough to push several market indexes to record levels for the fifth consecutive session, and one to a sixth straight high.
The Dow Jones industrial average ended up 2.17 points at a new high of 5,541.62--its 10th record in the last 11 sessions.
The blue-chip average rallied more than 45 points in the morning, then slid on computer-driven selling about midday. But the Dow slowly trimmed its losses through the afternoon, maintaining a pattern of rallying into the close that has prevailed all week. It was up 167.63 for the week.
Advancing issues led decliners by a slim margin on the New York Stock Exchange. Volume was heavy at a revised 476.64 million shares as of 4 p.m., ahead of Thursday’s pace.
The broad market finished mostly higher. The NYSE’s composite index rose 0.29 point to 349.44, the Standard & Poor’s 500-stock index rose 0.30 point to 656.37, and the Nasdaq composite rose 1.43 point to 1,094.60. All three indexes broke through Thursday’s record highs. It was the sixth straight record for the Nasdaq and the fifth consecutive high for the other two.
Traders and analysts said the current strength in the stock market is in large part the result of record investments of cash into stock mutual funds.
The Investment Company Institute, a mutual fund trade group, said Wednesday that investors had put a record $24.5 billion more into stock mutual funds in January than they had removed.
But the market’s rise has not been entirely driven by cash flows, said James Solloway, research director at Advest Research. “The fact of the matter is that when you look at the stock market in the aggregate, it is still priced reasonably well versus the level of profits out there right now and the level of interest rates.”
Bond yields were mixed Friday. The yield of the Treasury’s newly auctioned 30-year bond was at 6.09%, up from 6.08% late Thursday after the auction. The prior issue’s yield was 6.14% on Thursday.
Fourth-quarter earnings have been surprisingly robust, said Ron Hill, a market strategist at Brown Bros. Harriman & Co., who cited earnings gains as a reason why his firm raised its 1996 target for the S&P; 500 on Friday to 700 from 675.
Some cyclical stocks, issues that perform well when the economy is growing, outperformed the rest of the market, in a reversal of Thursday’s dominant strategy.
Investors bought cyclicals on the hope that those stocks would benefit the most from any further interest rate cuts by the Federal Reserve Board.
Among Friday’s market highlights:
* Auto stocks gained early in the day after Chrysler announced a treaty Thursday with dissident investor Kirk Kerkorian to improve the auto maker’s shareholder value. Chrysler was up as much as 2 5/8 points on an intraday basis but ended down 1 at 55 3/4.
The early strength in Chrysler boosted other auto stocks, however. Ford climbed 3/4 to 30 1/4 and General Motors added 5/8 to 52, both in active trading on the Big Board.
* Boeing, also a cyclical stock, rose 3 1/8 to 82 5/8. The Wall Street Journal reported that the aircraft maker would hire at least 7,000 new workers by early 1997. Boeing declined to comment.
* Alcoa dropped 5/8 to 56 3/8, Bethlehem Steel fell 3/8 to 15 1/2 and Delta Airlines retreated 1 to 71 7/8.
Overseas stock markets finished mixed.
Gold prices fell sharply Friday for the second time in three days.
On the New York Mercantile Exchange’s Comex division, gold for April delivery fell $3.70 to $407.80 an ounce, and earlier hit a low for the month of February of $406.50.
