Stocks Advance Broadly; Dow Just Shy of 6,000
The Dow Jones industrial average pushed closer to 6,000 on Wednesday as stocks advanced broadly, led by technology shares, with interest rates dipping further in the bond market.
The Dow rose 29.07 points to 5,933.97, extending its dramatic rebound to more than 750 points, or 14.5%, from the depths of July’s bruising sell-off. Less than a year after breaking past the 5,000 mark, the blue-chip barometer is just 1% shy of 6,000.
Broader measures also advanced to new highs in what shaped up as the broadest rally in two weeks.
The Standard & Poor’s 500-stock list closed at a new high for the third straight session. The Nasdaq market, which has lagged the market’s rebound, rose 1.2%, or 14.60 points to 1,236.11, its best finish since its record high 1,249.15 of June 5.
And records are not only being set in the U.S. In London, British shares punched through the main FTSE-100’s 4,000 level to tote up another record close. Buoyed by optimism about the world economy, stock markets in Ireland, Norway, Denmark, Belgium, the Netherlands and Canada also moved into record territory.
Gains, although not for the record books, were also posted in France, Italy, Switzerland, Austria, Japan, Taiwan, Indonesia, Malaysia and South Africa.
“You have a sort of worldwide consensus developing that the global economy is growing at a moderate pace with moderate inflation,” said Elliott Platt, director of economic research at Donaldson, Lufkin & Jenrette Securities Corp. in New York.
Many traders and analysts see few signs that the world’s leading central banks intend to intervene and boost interest rates any time soon in an effort to check inflationary pressures.
In U.S. markets, there were few major developments to steer trading, allowing a continuation of the confidence-building calm that has settled over the market since last week, when the Federal Reserve Board decided that inflation wasn’t enough of a threat to warrant an economy-slowing interest rate increase.
“Investors are concluding that we’re going to have a pleasant environment of growth and no inflation. That’s a winning combination for stocks,” said Abby Joseph Cohen, chief market strategist at Goldman, Sachs & Co. “Some investors who had become cautious in their market views in advance of the Fed meeting have decided that the caution was either wrong or premature.”
Stocks drew some lift from the bond market, where interest rates dipped to their lowest level since August. As bond prices rose, the yield on the 30-year Treasury bond--a key determinant of corporate and consumer borrowing costs--fell to 6.83% from Tuesday’s 6.87%.
There was little reaction to a report showing that construction spending rebounded 0.9% in August. The increase was in line with expectations, but added weight to arguments that the Fed may have to increase its key lending rates in the coming months to keep inflation under control.
Among Wednesday’s highlights:
* The technology sector benefited from another indication of renewed demand as CompUSA, the nation’s biggest computer retailer, reported that its sales in the just-ended quarter rose 26.7% compared with a year ago. Its shares rose 2 to 55 3/8 in NYSE trading. Related industry leaders also rose, including Intel, up 3 1/4 at 99; Microsoft, up 2 5/8 at 134 3/4; Dell Computer, up 5 1/2 at 82 3/8; and IBM, up 2 1/8 to 125 7/8.
Among smaller companies, Remedy jumped 8 1/2 to 87 after forecasting higher-than-expected third-quarter earnings. The software company also set a 2-for-1 stock split.
* Toys R Us rose 2 5/8 to 31 1/2 and Baby Superstore surged 5 to 24 7/8 after Toys R Us agreed to buy the operator of infant and toddler superstores in a stock deal valued at about $376 million.
* AT&T; rose 1/2 to 39 3/8 on news it will offer in 40 major markets a new wireless product that combines voice messaging and paging communications in a single telephone.
* First USA rallied 2 3/4 to 59 5/8. Merrill Lynch named the stock its Focus One stock of the week.
* Some companies fell after warning of earnings shortfalls. Great Lakes Chemical lost 3 1/8 to 53 7/8, Engelhard was off 2 7/8 to 20 1/2, Lydall fell 3 3/8 to 21, Restrac tumbled 7 1/2 to 9 1/2, Intelligent Medical slumped 6 3/4 to 7 1/2, Summit Medical was pummeled down 5 3/4 to 7, DSC Communications lost 4 3/8 to 18 3/4, Orthologic shed 4 1/16 to 7 5/16 and Software 2000 lost 2 1/4 to 7 3/4.
Overseas, Tokyo’s Nikkei stock average rose 0.2% and Frankfurt’s DAX index rose 0.8%.
On commodity markets, heating oil prices reached a 5 1/2-year high at the New York Mercantile Exchange after industry reports showed low supplies in the Northeastern United States.
But gasoline and crude oil prices tumbled after the same industry reports showed supplies were building. Heating oil for November delivery settled 1.22 cents higher at 71.98 cents a gallon after peaking at 73.15. November crude settled 9 cents lower at $24.05 a barrel, and November gasoline settled 0.40 cent lower at 62.42 cents a gallon.
“Crude is in a tug of war between strong heating oil and weak gasoline,” said Sweeney Oil trader Jim Ritterbusch.
The U.S. Energy Information Administration said Wednesday that for the week ended Sept. 27, distillate stocks, which include heating oil, dropped 800,000 barrels.
Market Roundup, D5
