Dow Tops 8,100 After Tumbling; Dollar Rockets
Bargain-hunters were ready as usual Thursday, turning a morning stock market slump into an afternoon rally in blue chips.
The Dow Jones industrial average closed up 28.57 points at 8,116.93, erasing a 95-point morning slide en route to its third consecutive record high.
Most broader market indexes also closed modestly higher, although losers had a slight edge over winners on the New York Stock Exchange in active trading.
Meanwhile, the dollar soared to another six-year high against European currencies.
On Wall Street, profit-takers moved in early Thursday, after a three-day advance that added nearly 200 points to the Dow by Wednesday’s close of 8,088. By late morning the index was at 7,993.
But it didn’t last. Stocks climbed steadily higher all afternoon.
“You’re still seeing a lot of people chasing the recent strength in the market,” said Franklin Morton, director of research at Ariel Capital Management in Chicago.
Most of this week’s gains came Tuesday and Wednesday as Federal Reserve Board Chairman Alan Greenspan delivered an encouraging midyear economic report to Congress without hinting of any imminent increase in the central bank’s key lending rates.
What’s more, second-quarter corporate earnings reports continue to look strong, on balance. “The numbers that have been coming out have been as expected or better,” said Don Fredell, senior managing trader at American Express Financial Advisors.
With its first close above the 8,100 mark, the Dow is up 25.9% year-to-date--nearly equaling its 26% gain for all of 1996.
Among other indexes, the Standard & Poor’s 500 rose 3.74 points to a record 940.30 Thursday, surpassing its previous peak of 936.59.
The Nasdaq composite eked out a 1.48-point gain to 1,569.13.
Bonds once again provided support for stocks, as yields closed mostly unchanged, despite a Labor Department report showing 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 [spring],” said Peter Canelo, U.S. investment strategist at Morgan Stanley Dean Witter.
But so far, investors don’t seem worried that a stronger economy could lead to higher interest rates.
Among Thursday’s highlights:
* Stocks moving on earnings reports included AirTouch Communications, up $3 to $31.50; L.M. Ericsson, up $4.56 to $46.31; Tekelec, up $9.56 to $56.31; Herbalife, up $3.50 to $20.50; and Colgate-Palmolive, up $1.81 to $77.
* In the tech sector, worries about slower earnings growth in the near-term because of higher expenses continued to weigh on two archrivals--Microsoft, which fell $3.44 to $138, and Netscape Communications, which dropped $2.38 to $37.25.
Many other tech shares advanced, however, including IBM, up $2.69 to $107.81; Digital Equipment, up $2.81 to $42.56; and Computer Sciences, up $4 to $79.88.
* Retail stocks were broadly higher, led by May Department Stores, up $2.06 to $55.13; Nordstrom, up $2.03 to $56; and Wal-Mart, up 50 cents to $37.
* Many financial stocks also advanced again, including SunAmerica, up $1.63 to $59.38; Travelers, up $2.44 to $70.75; and H.F. Ahmanson, up $1.06 to $52.63.
In currency trading, the streaking dollar hit 1.834 German marks, up from 1.825 Wednesday and a six-year high. It also soared against other continental European currencies, including the French franc. (Investor Spotlight, D7.)
The German Bundesbank surprised some traders after a meeting when it adjourned for summer holidays, giving no indication it opposes the dollar’s rally or that it plans to raise interest rates soon.
