Dow Charges Past 6,000 as Bull Market Enters Seventh Year

Columbus Day provided a suitable backdrop for U.S. stocks to sail into uncharted waters Monday, as the Dow Jones industrial average closed above the 6,000 mark for the first time.

The famed barometer of blue-chip shares rose 40.62 points to a record 6,010.00, shooting past the milestone early in the session and holding there.

The move past 6,000 came less than a year after the Dow’s first close above 5,000 and less than 20 months after the first finish above 4,000.

Although the percentage gain in each 1,000-point move grows smaller with the Dow’s ascent, they are still impressive numbers: The Dow’s rise from 5,000 to 6,000 represents an average 20% advance in the 30 big stocks that make up the index.

Reaching 6,000 means the average Dow stock has doubled in value since the index first crossed the 3,000 level in April 1991. The current bull market began six years ago last Friday, so Monday marked the first session of the bull’s seventh year.

Monday’s rally was spurred in part by a strong third-quarter earnings report from Chrysler, boosting its shares 1 to 32 3/4 and also lifting General Motors, a Dow stock, 1 3/4 to 51 7/8. Also, energy stocks surged after oil prices leaped again, as new tensions flared in Iraq.

Stocks also benefited from the fact that the bond market was closed for the holiday, so interest rate moves didn’t provide the usual distraction, traders said.

Still, analysts noted that the trend in rates has been lower in recent months, adding more impetus to Wall Street’s bull run.

“What’s driving the market is a combination of a positive outlook for interest rates and some good early earnings,” said Chet Needelman, president of Palley-Needelman Asset Management, a $4-billion asset money manager in Newport Beach.

A blockbuster earnings report from computer chip giant and technology bellwether Intel, released after the market closed, could set the tone for another sharp gain in stocks today.

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Just three months ago many analysts were sounding the death knell for stocks’ long advance, as rising interest rates and some disappointing second-quarter earnings reports triggered a sell-off that pushed the Dow down about 10% from its May peak, to 5,175 in midday trading on July 16.

But blue-chip stocks quickly rebounded in early-August, and by Sept. 13 the Dow had recouped all of its summer loss and reached a new high.

Analysts say investors have been drawn back to stocks by the expectation that the U.S. economy is slowing enough to keep interest rates subdued, but not enough to put a severe damper on corporate earnings growth, which has underpinned the bull market for the past four years.

With Monday’s third-quarter reports from Chrysler, Intel and other key corporate names, investors’ optimism doesn’t seem grossly misplaced, some experts say.

“Chrysler’s news was good news in general for the state of the economy,” said Alfred E. Goldman, veteran market analyst at brokerage A.G. Edwards & Sons in St. Louis. “Where is this dead consumer the bears have been telling us about? The economy is still together and that’s why we’re still in a bull market.”

The Standard & Poor’s 500 index and the Nasdaq composite index of mostly smaller stocks also moved back into record territory on Monday, padding Friday’s rebound from several days of profit-taking.

The S&P; index rose 2.88 points to 703.54; the Nasdaq index gained 8.09 points to 1,256.36.

The market’s breadth wasn’t spectacular, however: Winners outnumbered losers by just 12 to 11 on the NYSE and by 19 to 18 on Nasdaq. Trading was moderate with some investors away for the holiday.

Moreover, the Dow got a big lift from its three energy stocks, as crude oil prices reached their highest level since the Gulf War in 1991. Texaco rose 3 5/8 to 101 3/4, Chevron gained 1 1/4 to 66 7/8 and Exxon rose 1 1/4 to 87 5/8.

Crude futures for November delivery rose 96 cents to $25.62 a barrel in New York trading. Analysts said the latest jump was spurred by news that the Patriotic Union of Kurdistan, which is battling a Kurdish faction allied with Iraqi leader Saddam Hussein, was marching closer on Monday to Irbil, northern Iraq’s principal city.

Although higher oil prices normally are bearish for stocks, the market has all but ignored oil this year. Some analysts say that is because general inflation in the U.S. economy hasn’t risen much even as energy prices have surged, so investors feel less threatened by turmoil in the energy sector.

More important to many investors has been the continuing earnings growth of Corporate America. Thanks in part to restructurings, staff cutbacks and higher productivity, many companies have continued to surprise investors with strong earnings gains this year.

Indeed, robust profit growth has buttressed many of the Dow stocks that have led the advance from 5,000 to 6,000, including chemical giant DuPont, up 47% since the Dow crossed 5,000 last November; industrial conglomerate AlliedSignal, up 46%; and General Electric, a company that, by virtue of its size and the diversity of its businesses, is often viewed as a proxy for the U.S. economy. GE shares have jumped 41% over the last year.

At the bottom of the Dow list, Bethlehem Steel has been the worst of the 30 stocks since 5,000, falling 41% as its earnings have plunged. And AT&T;, struggling with competitors in the long-distance market, also has lost ground, falling nearly 16%.

With the Dow at 6,000, some bearish Wall Streeters are more adamant than ever that the market is dangerously overpriced and poised to plummet.

But other analysts say that with the average Dow stock priced at about 20 times this year’s estimated earnings per share--at the high end of its range, historically--there is precedent for prices to go even higher as long as investors maintain faith in subdued interest rates and growing profits.

“A bull market always, absolutely always, goes further than people expect,” said Chet Needelman.

Market Roundup, D10

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More Means Less

The higher the Dow Jones industrial average gets, the easier it is to reach the next milestone. When the Dow reached each millennium mark, and the percentage gain between each mark: *--*

% gain from Time Mark Date last 1,000 mark elapsed 1,000 Nov. 14, 1972 -- -- 2,000 Jan. 8, 1987 100% 14 years, 3 mos. 3,000 April 17, 1991 50% 4 years, 3 mos. 4,000 Feb. 23, 1995 33% 3 years, 10 mos. 5,000 Nov. 21, 1995 25% 11 months 6,000 Oct. 14, 1996 20% 11 months

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Source: Times research

Dow Leaders, 5,000 to 6,000

Here are the 30 stocks in the Dow industrial average and their percentage changes between Nov. 21, 1995--when the index first closed above 5,000--and Monday, when it closed above 6,000. Also shown are the stocks’ current dividend yields (the percentage return from their dividends alone).

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Closing price: Div. Stock 11/21/95 Monday Change yield General Electric $67.38 $95.00 +50.0% 1.9% DuPont 65.13 96.00 +47.4% 2.4% AlliedSignal 44.25 64.63 +46.1% 1.4% Texaco 71.63 101.75 +42.0% 3.3% Woolworth 15.13 21.00 +38.8% -- IBM 94.50 130.00 +37.6% 1.1% United Technol. 90.75 122.88 +35.4% 1.8% Boeing 73.38 98.13 +33.7% 1.1% Chevron 50.88 66.88 +31.4% 3.2% Coca-Cola 38.38 49.38 +28.7% 1.0% Sears 39.50 49.50 +25.3% 1.9% Caterpillar 59.38 74.13 +24.8% 2.2% Intl. Paper 35.50 42.88 +20.8% 2.3% Merck 59.38 71.63 +20.6% 2.2% Dow index 5,023.55 6,010.00 +19.6% 2.1% Westinghouse 15.88 18.75 +18.1% 1.1% 3M 62.06 71.38 +15.0% 2.7% Goodyear 40.63 45.75 +12.6% 2.2% Union Carbide 38.88 43.38 +11.6% 1.7% Eastman Kodak 69.88 77.88 +11.4% 2.1% Procter & Gamble 86.50 95.50 +10.4% 1.9% Exxon 79.75 87.63 +9.9% 3.6% American Express 43.25 47.38 +9.5% 1.9% J.P. Morgan 77.00 83.63 +8.6% 3.9% Alcoa 55.13 58.38 +5.9% 1.5% General Motors 49.00 51.88 +5.9% 3.1% Walt Disney 60.88 64.13 +5.3% 0.7% Philip Morris 90.13 93.50 +3.7% 5.1% McDonald’s 45.00 46.63 +3.6% 0.6% AT&T; 46.06 38.75 -15.9% 3.4% Bethlehem Steel 13.63 8.00 -41.3% --

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All stocks trade on NYSE. Prices adjusted for splits where applicable.

Source: Bloomberg Business News