Dow Closes In on 8,000 in Year-End Rally
Stocks extended a year-end rally Tuesday, giving the Dow Jones industrial average one more crack today to finish 1997 above 8,000.
The Dow rose 123.56 points to 7,915.97, lengthening Monday’s 113-point jump and pushing this year’s gain toward 23%.
Broad-market indicators also posted big gains. The Standard & Poor’s 500 index gained 17.49 points to 970.84, up 31% for the year so far, and bringing the index within 13 points of record territory.
The Nasdaq composite index advanced 27.58 points to 1,565.03, up 21% for the year through Dec. 30. The New York Stock Exchange composite index rose 8.79 points to 510.28, about 4 points from a new closing high.
Barring a steep decline today, 1997 should be the third straight year of better-than 20% gains for all three indicators, an unprecedented achievement. Bulls traditionally rule on Wall Street in the final sessions of a year as investors anticipate a further rally in January fueled by fresh flows of cash into mutual funds and retirement accounts.
In regard to this year, concern over South Korea’s financial crisis has eased somewhat, and investors have been swarming to buy stocks that had stumbled earlier in the month, including technology and financial issues.
News that leading global banks had agreed to help South Korea resolve its financial crisis helped set the stage for this week’s rallies, analysts said.
“There’s really been nothing of earth-shattering importance to send the Dow up 250 points in two days. It’s seasonal factors and market dynamics,” said Scott Bleier, chief investment strategist at Prime Charter.
Bleier and other analysts noted that the market has rallied almost every year over the final days of December and the first days of January as portfolio managers repurchase stocks that were sold to record tax losses or lock in profits.
But with the market struggling through last week’s sessions of thin trading, it started to seem there might not be what’s known as a Santa Claus rally this time around.
Tuesday’s stock market gains came despite a weak day in bond trading. Long-term interest rates headed back toward 6% on news that consumer confidence jumped to a 28-year high in December. The yield on the benchmark 30-year Treasury bond rose to 5.96% from Monday’s close at 5.92%. On the Big Board, advancing issues outnumbered decliners by a nearly 3-1 margin in moderate trading.
Among Tuesday’s highlights:
* Microsoft rose $3.94 to $130.25 to lead the Nasdaq advance for the second day in a row. Intel lagged the rally again, rising just 77 cents to $71.69.
Similarly, Dow components IBM, up 38 cents to $103.13, and Hewlett-Packard, up 63 cents to $61.56, played a limited role in that measure’s advance.
The Dow’s strongest components were United Technologies, up $2.81 to $72.25; Disney, up $2 to $99; General Electric, up $1.94 to $74.38; and Merck, up $1.94 to $106.69.
* Retail stocks gained after Dayton Hudson said Christmas sales were stronger than initially estimated. Dayton Hudson soared $6.38 to $68.38; Wal-Mart Stores rose 69 cents to $38.63; Sears added $1.31 to $44.69; and Kmart climbed 31 cents to $11.13
In currency trading, the dollar gained against the Japanese yen but lost headway against the German mark.
Investors also swapped yen for marks to square their positions after Tokyo markets closed early for an extended New Year’s holiday.
The dollar rose to 130.13 yen, up from 129.30 yen at Monday’s close in New York. It was at 1.7890 marks, compared with 1.7895 on Monday.
On commodities exchanges, soft red winter wheat futures slumped to life-of-contract lows as professional speculators sold.
At the Chicago Board of Trade, wheat for March delivery closed 6 cents a bushel lower at $3.28.
At the New York Cotton Exchange, orange juice prices dropped to their lowest level in three weeks. Frozen concentrated orange juice for March delivery fell 3.55 cents a pound to close at 85.85 cents.
On foreign markets, Tokyo’s Nikkei stock average rose 3.3%, Frankfurt’s DAX index rose 1.2% and London’s FTSE-100 rose 0.4%.
