Dow Surpasses 6,400; Bond Yields Decline
The Dow Jones industrial average jumped to yet another record Wednesday--its 10th so far this month--in a rally driven by gains in the shares of General Motors, Caterpillar and Boeing.
The 30-share index rose 32.42 points to 6,430.02, beating Tuesday’s record of 6,397.60 and crossing over the 6,400 mark for the first time.
A late wave of profit taking erased another sharp gain by IBM and other technology bellwethers, but other blue-chip shares picked up the slack as interest rates fell to another eight-month low in an afternoon bond market rally.
In the broader market, advancing issues led declines 9 to 7 on the New York Stock Exchange.
“There’s no question it’s frothy, but this is sustainable as long as bond yields stay to the market’s advantage,” said Joseph Battipaglia, chief investment officer at Gruntal & Co.
In the bond market, the 30-year Treasury added 11/32, lowering its yield to 6.40% from 6.43% on Tuesday. Bonds got a boost from a successful auction of $12.5 billion of five-year U.S. notes, traders said. The high yield was 5.95%, the lowest rate since five-year notes sold for 5.68% on Feb. 28.
Several other market gauges again hit records--among them the NYSE composite index and the Standard & Poor’s 500 index--but the Dow again outperformed the broader market.
For the fourth straight day, IBM led the charge for the Dow and other major indexes, riding a sudden swell of enthusiasm among securities analysts.
IBM gyrated sharply through the session, jumping nearly 5 points to 159 to set another nine-year high. But traders quickly used the morning advance to secure some profit, and the stock eventually closed down 1 1/2 to 152 5/8.
The same fate befell other technology giants that have surged in recent days. In Nasdaq trading, Intel gained just 1/8 to 120 7/8 after rising as high as 124 1/2, while Microsoft fell 2 5/8 to 153 1/4 after topping out at 158.
Battipaglia attributed some of the recent strength in technology to upbeat chatter emanating from Comdex, the big computer industry trade show in Las Vegas.
“We’re hearing that apparently PC demand is picking up going into the holiday season. These big companies are picking up in anticipation of that,” he said.
The Standard & Poor’s 500-stock index rose 1.79 points to 743.95, and the NYSE composite rose 1.00 points to 392.80, both records. Over the last 13 sessions, the S&P; 500 has finished at record highs nine times, and the NYSE has set new closing marks 10 times.
The Nasdaq composite index flirted with a new high until the late technology pullback, gaining 2.32 points to 1,264.94 on the day. The American Stock Exchange’s market value index rose 2.55 points to 587.19.
Among Wednesday’s highlights:
* Despite mounting caution, investors were still buying any blue-chip stock that appeared poised to outperform other issues. Caterpillar was one such stock, surging 4 3/4 to 78 3/4 after Smith Barney upgraded its opinion of the heavy-machinery giant.
Boeing climbed 2 3/8 to 96 3/8 on reports that American Airlines was set to place a multibillion-dollar aircraft order. American parent AMR, which declined to comment on the reports, lost 1 to 91.
* General Motors rose 2 1/2 to 57 1/8 on rumors that its Hughes Electronics unit might merge with Raytheon. Hughes, whose stock trades separately from GM, jumped 3 7/8 to 53 5/8 and Raytheon gained 2 5/8 to 52 1/2. All three companies declined to comment on the rumors.
* Brokerage shares declined after the government unveiled a regulatory system that makes it easier for national banks to sell securities. Morgan Stanley Group fell 1 1/8 to 57 and Merrill Lynch, the largest securities firm, fell 5/8 to 78 1/4.
* The continued strength in the tech sector boosted software maker Computer Associates International, up 3 7/8 to 63 7/8, and networking companies Oracle, which gained 1 3/4 to 47 7/8, and Sun Microsystems, up 2 1/4 to 59 1/4.
* Donna Karan International rose 10%, or 1 1/2, to 16 1/8, after the fashion house named Morgan Stanley executive Dewey K. Shay senior executive vice president and chief administrative officer.
Overseas, Tokyo’s Nikkei stock average rose 1.1%, Frankfurt’s DAX index rose 0.4%, and London’s FTSE 100 fell 0.4%.
