Dow Sails Past 8,100 After Profit-Taking
The bargain-hunters were ready as usual Thursday, quickly transforming a day of profit-taking into a buying opportunity and another record-setting session for the stock market.
The Dow Jones industrial average rose 28.57 points to close at 8,116.93, erasing a 95-point slide en route to its third consecutive record high. With its first close ever above 8,100 points, the blue-chip barometer has now gained 25.9% this year, nearly equaling its 26% gain for all of 1996.
Broad-market indicators also snapped back from steep morning losses and some set new highs.
After a three-day advance that added nearly 200 points to the Dow, investors found an excuse to lock in some of those gains as the bond market stumbled on some mildly unsettling economic news. The yield on the benchmark 30-year Treasury bond held at late Wednesday’s rate of 6.43%.
“It’s a pretty typical occurrence nowadays. We sell off on some weakness in the bond market and then we come right back,” said Peter Canelo, U.S. investment strategist at Morgan Stanley Dean Witter. “There’s still plenty of money on the sidelines that’s going to take [stocks] higher.”
Most of this week’s gains came Tuesday and Wednesday as Federal Reserve Board Chairman Alan Greenspan delivered an encouraging midyear report to Congress without hinting of any imminent increase in the central bank’s key lending rates.
Concerned that rising employment costs and heavy consumer demand might lead companies to boost prices, Fed officials nudged a key rate higher in late March to slow the economy. Since then, however, the Fed has decided against further rate hikes, which could have hurt profit growth.
But in a reminder that companies still face a strong job market that might force them to pay higher wages, the Labor Department reported Thursday that the number of American workers filing first-time claims for jobless benefits plunged by 42,000 last week to 299,000, the lowest level in nearly a year.
“We’ve also seen some better retail sales over the last month and a half, which suggests the economy is coming back after being slower in March, April and May,” Canelo said.
Declining issues outnumbered advancers by a slim margin on the New York Stock Exchange, where volume was heavy again at 571.03 million shares.
The Standard & Poor’s 500-stock list rose 3.74 points to close at 940.30 and the Nasdaq composite index rose 1.48 points to close at 1,569.13, struggling higher despite a steep drop by Microsoft, which fell $4.44 to $138.
Among Thursday’s highlights:
* Among tech stocks, IBM rose $2.69 to $107.19 to lead the Dow’s advance, and Digital Equipment rose $2.81 to $42.56 after reporting a better-than- expected profit for the April-June quarter.
* The Dow also drew a boost from Travelers Group, up $2.44 at $70.75, and Sears, up $2.25 to $61.75.
Overseas, Tokyo’s Nikkei stock average rose 0.8%, Frankfurt’s DAX index fell 1.6% and London’s FTSE-100 rose 0.2%.
Bond prices barely budged Thursday as investors hesitated to make major bets before seeing new readings on economic growth and inflation after a hearty rally this week that pushed yields to eight-month lows. The yield on the benchmark 30-year Treasury bond held at late Wednesday’s rate of 6.43%.
The dollar rose for the fourth straight day Thursday, touching another 6-year high against the mark, on fresh hints that Germany won’t oppose the rally and on unexpectedly weak Japanese economic news.
The dollar reached an intraday high of 1.8387 marks, the strongest since July 1991, before settling in New York at 1.8348 marks, up from 1.8268 Wednesday. The dollar has gained nearly 20% against the mark so far this year.
