Stocks Advance Broadly; Dow Is 1.2% From 6,000
The Dow Jones industrial average pushed closer to 6,000 on Wednesday as stocks advanced broadly, led by financial and technology shares. Falling bond yields again helped boost Wall Street.
The Dow rose 29.07 points to a record 5,933.97, extending its dramatic rebound to more than 750 points, or 14.5%, from the depths of July’s sharp sell-off.
Less than a year after breaking the 5,000 mark, the blue-chip barometer is just 1.2% shy of 6,000.
More important, the broad market Wednesday enjoyed its strongest rally in two weeks, with New York Stock Exchange winners swamping losers by more than 2 to 1.
The Nasdaq composite index of mostly smaller stocks jumped 14.60 points, or 1.2%, to 1,236.11, a solid rebound after two days of mild profit taking. The index now is the highest since its record close of 1,249.15 on June 5.
Analysts noted that the U.S. market’s latest surge is inspiring foreign stock markets as well. “You have a sort of worldwide consensus developing that the global economy is growing at a moderate pace with moderate inflation,” a great environment for stocks, said Elliott Platt, economist at Donaldson, Lufkin & Jenrette Securities Corp. in New York.
In Britain, the FTSE-100 stock index rose 22.9 points to a record 4,015.10 on Wednesday, topping the 4,000 mark for the first time. Record highs were also set in markets in Ireland, Norway, Denmark and Belgium, among others.
In Mexico, the Bolsa index zoomed 71.84 points to 3,358.32.
In Canada, the Toronto Stock Exchange’s 300-share index shot up 58.48 points to a record 5,388.03 after the Bank of Canada cut short-term interest rates for the eighth time this year.
Falling interest rates have been the rule in much of the world this year--except for the United States, where strong economic growth has kept rates up.
But the latest U.S. stock rally has stemmed in part from hopes that U.S. rates may decline significantly if the economy continues to show signs of moderating.
On Wednesday, bond yields fell to fresh five-week lows, with the bellwether 30-year Treasury bond yield dropping to 6.83% from Tuesday’s 6.87%.
“We’ve had a good dose of indicators [suggesting] that the economy is very likely to slow in the future,” said Patrick Retzer, bond manager at Heartland U.S. Advisors in Milwaukee. Wednesday’s report that construction spending rebounded 0.9% in August didn’t disturb bond traders.
Most bond market pros are looking to Friday, when the government will report September employment trends. The monthly employment reports have often riled the bond market this year because they have tended to point to more economic strength.
This time, many analysts are confident that job growth trends will confirm that an economic slowdown is in the offing.
Among Wednesday’s highlights:
* Financial stocks gained as interest rates fell. Among banks, NationsBank rose 1 to 87 3/8, Wells Fargo added 1 3/4 to 261, BankAmerica jumped 1 to 84 and Citicorp was up 3/4 to a record 92 1/4.
Brokerage stocks also surged, with Merrill Lynch zooming 2 to 69 and Dean Witter up 1 1/8 to 56 3/4. (Investor Spotlight, D6.)
* The tech sector benefited from another indication of renewed demand for personal computers as CompUSA, the nation’s biggest computer retailer, said its sales last quarter rose 7.2% at stores open at least one year.
CompUSA shares jumped 2 to 55 3/8. Also rising were Intel, up 3 1/4 to 99; Compaq, up 1 1/2 to 65 7/8; Microsoft, up 2 5/8 to 134 3/4; and Dell, which soared 5 1/2 to 82 3/8.
But Hewlett-Packard fell 1 7/8 to 46. The company indicated that its order rate is rising from the sluggish 8% growth recorded in the second quarter, but that growth remains well below the 24% rate of the first quarter.
* Many telecommunications industry shares rallied with tech stocks, despite a downbeat profit forecast from telephone equipment maker DSC Communications, which plunged 4 3/8 to 18 3/4 after citing an order slowdown.
Among other telecom issues, Advanced Fibre Communications rose 1 3/4 to 46 7/8, Newbridge Networks added 1 to 65 1/2, Tellabs gained 3 7/8 to 72 3/4 and ADC Telecomm surged 1 7/8 to 63 1/4.
* DSC wasn’t the only firm warning about weaker third-quarter earnings. Others included Great Lakes Chemical, which sank 3 1/8 to 53 7/8; fibers company Lydall, down 3 3/8 to 21; Intelligent Medical Imaging, down 6 3/4 to 7 1/2; and medical technology firm Orthologic, which shed 4 1/16 to 7 5/16.
Unlike after the second quarter, however, investors seem to be treating each announcement as an isolated event, rather than using them as an excuse to dump stocks across the board.
* Energy stocks were strong, even though oil and gasoline price were mixed in futures trading. Chevron jumped 1 3/8 to 64 3/8, Unocal gained 1 to 37 and Noble Affiliates surged 1 3/8 to 43 1/8.
In commodities trading, 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 eased after the same industry reports showed supplies were up.
* Some retail stocks were boosted after Toys R Us agreed to buy Baby Superstore. Toys R Us rose 2 5/8 to 31 1/2 and Baby Superstore shot up 5 to 24 7/8. Other winners included Gadzooks, up 3 3/4 to 36 5/8; Wet Seal, up 1 5/8 to 37 3/8; and TJX, up 3/4 to 36 1/8.
Market Roundup, D5
