Dow Closes In on 7,000 Mark, Paced by Rally in Tech Stocks
The Dow Jones industrial average soared more than 100 points Wednesday to close above the 6,900 level for the first time, as a rally in technology stocks spread to the broader market.
The steep gains brought the world’s most closely watched blue-chip index near the 7,000 milestone, only four months since it crossed the 6,000 mark.
The Standard & Poor’s composite index set a new high, and the Nasdaq index rose more than 2%.
The Dow ended up 103.52 points, or 1.51%, at a record 6,961.63, breezing through the old high of 6,883.90 set Jan. 21. It was the 11th new high for the Dow this year, bringing its 1997 gain to nearly 8%.
There were no significant economic developments to spur Wednesday’s rally, which analysts attributed in part to a report confirming that money continued to pour into mutual funds last month, reinforcing the demand for stocks.
The sweeping rally, helped by a strong dollar and powerful mutual fund inflows, left few sectors behind. Technology, financial, energy, gold mining and transportation shares all surged.
Analysts said the sudden burst of investors’ confidence was rooted in the technology sector, which got a critical boost when semiconductor equipment maker based Applied Materials reported surprisingly strong quarterly profit late Tuesday. Shares of the Santa Clara, Calif., company surged 7 to 52 1/8.
The earnings triggered a sharp technology rally that quickly spread to the broader market.
Investors were also encouraged, analysts said, by the market’s late rally on Tuesday, which came despite the recent profit taking in the tech sector.
“The tech stocks were weak in the last several sessions and that did not translate into much weakness elsewhere, and that was encouraging to traders,” said Ricky Harrington, a technical analyst at Interstate/Johnson Lane in Charlotte, N.C.
But U.S. bonds were little changed for a third day as the Treasury met with lukewarm demand for the $12 billion of 10-year notes sold Wednesday.
Bonds gave up early gains after the government’s sale of 10-year notes met with the weakest demand since May 1995, as measured by the bid-to-cover ratio--the dollar amount of bids received divided by the securities sold. The ratio at Wednesday’s sale was 1.90, compared with an average of 2.27 at the last 10 sales of 10-year notes.
The benchmark 30-year bond was little changed, leaving its yield at 6.70%.
The Treasury sold the notes at an average yield of 6.374%. The government will complete its quarterly debt sales today, when it sells $10 billion of 30-year bonds. It sold $17.75 billion of three-year notes Tuesday.
The renewed appetite for stocks came amid fresh reports that investors were pouring more cash into U.S. stock mutual funds.
The Investment Company Institute, a trade group, said net cash flows into such funds nearly doubled in January to $24 billion from $12.22 billion in December, but still not as high as the record $28.9 billion of January 1996.
Also lending support was the dollar, which worked its way still higher, gaining ground against both the German mark and the Japanese yen. Against the yen, the dollar reached an intraday high of 124.45 yen, near its four-year high of 124.70 yen reached last Friday, before settling in New York at 124.17 yen, up from 123.15 on Tuesday.
Advancing issues outnumbered decliners by a 7-3 margin on the New York Stock Exchange. The Standard & Poor’s 500 list rose 13.18, or nearly 1.7%, to close at 802.77, jumping past 800 a little more than four months after its first move above 700. The NYSE’s composite index, which is also dominated by larger companies, rose 5.79 points to 419.88, padding Tuesday’s record high.
The Nasdaq Composite index jumped 27.45 points to 1,358.96.
Among Wednesday’s highlights:
* The Dow’s strongest issues were Merck, up 2 7/8 to 95 7/8; Boeing, up 2 7/8 to 109 5/8; United Technologies, up 2 1/2 at 76 1/2; and Eastman Kodak, up 2 3/8 to 92 3/4. But perhaps more notable was that all but two Dow components took part in Wednesday’s jump. IBM fell 1/4 to 145 and Bethlehem Steel dropped 1/4 to 7 7/8.
* Oil stocks gained as investors sought to capitalize on a recent decline in share prices. Mobil rose 2 3/4 to 130 1/4, Exxon rose 1 3/8 to 103 and Texaco rose 1 3/8 to 104 3/4.
* Gold prices jumped on New York’s Commodity Exchange, helping gold mining shares to one of their strongest sessions in weeks. Newmont Mining rose 2 1/4 to 41 1/4 and Homestake Mining rose 7/8 to 14 3/4.
* ITT rose 1 5/8 to 57 5/8 after its board voted to reject Hilton Hotels’ unsolicited $10.5-billion acquisition offer. Hilton fell 1/2 to 27 5/8.
* Columbia/HCA Healthcare rose 1 1/2 to 42 5/8 after the hospital chain said fourth-quarter net income rose to 61 cents a share from 53 cents in the year-earlier quarter, matching expectations.
Overseas, Tokyo’s Nikkei stock average rose 1.3%, Frankfurt’s DAX index rose 0.9% and London’s FTSE-100 index was unchanged.
* Market Roundup, D6
* POWERING UP: Shares of chip equipment maker Applied Materials jumped 7%. D2
