Dow Manages New Record as Broader Indexes Retreat
Blue chip stocks edged to another record high in five sessions, but broader indexes retreated into Monday’s close as investors braced for today’s key economic data.
But the dollar surged to its highest level against the German mark since the fall of the Berlin Wall, and bond prices rose in light volume.
The Dow rose 7.67 points to close at 8,121.11 after surrendering most of a nearly 65-point gain over the final hour of trading. But because the blue-chip barometer slipped just 3.5 points on Friday, the gain was enough for the Dow to beat Thursday’s record finish at 8,116.93 points.
Several other broad-market indicators turned lower by the close after flirting with new highs. The Nasdaq market was weighed down all day by another weak showing among computer-maker stocks.
Stocks drew support throughout the session from the bond market, where interest rates sank to their lowest level of the year amid reports that the Clinton administration and congressional leaders were close to sealing a balanced budget agreement after months of haggling. An announcement on a final agreement came after the markets closed.
A balanced budget would help protect against heavy government borrowing, which can weigh down the bond market with a flood of Treasury securities. As bonds rose Monday, the yield on the 30-year Treasury fell to 6.40%, the lowest finish since early December and down from Friday’s 6.45%.
Although it is a big week for economic news, there were no major reports scheduled for Monday, leaving investors to focus on today’s report on second-quarter employment costs and Friday’s reading on July job creation and wage levels.
“We aren’t predicting any major shocks [in this week’s data] that would cause any big downdrafts,” said Edward Collins, head of stock trading at Daiwa Securities America. “But with the market where it is, people are going to be cautious this week.”
Advancing issues barely outnumbered decliners on the New York Stock Exchange, in fairly light trading.
The Standard & Poor’s 500-stock list fell 2.34 points to close at 936.45, and the NYSE composite index fell 0.87 point to finish at 485.93. Both measures had spent much of the day in record territory. The Nasdaq composite index fell 6.05 points to close at 1,563.53.
Among Monday’s highlights:
* Dragging technology stocks lower was Dell Computer, off $2.63 to $78.88; Compaq Computer fell $3.63 to $132, and IBM fell $2 to $105.
* The Dow’s advance was led by Alcoa, up $2 to $86.31, and General Motors, up $1.63 to $58.50 after Sunday’s resolution to a parts factory strike that had threatened to shut GM’s North American production.
* Financial stocks benefited from falling bond yields. J.P. Morgan rose $1.44 to $110.75, Donaldson, Lufkin & Jenrette rose $2.06 to $66.63, KeyCorp rose $1.31 to $60.75 and First Union rose $1 to $99.06.
In currency trading, the dollar has risen about 20% against the German mark this year on concerns that the planned single European currency would be weaker than expected and because of persistent weakness in the German economy.
The dollar’s rise against the German currency has accelerated recently as investors have gained confidence that the U.S. economy was growing steadily with little inflation.
In New York trading, the dollar stood at 1.8440 marks after earlier hitting 1.8490, its highest level since November 1989. The dollar closed at 1.8378 marks Friday.
The dollar broke through 117 Japanese yen and stood at 117.87 yen late in New York, its highest level in 2 1/2 months, and up from 117.02 late on Friday. The British pound fell to $1.6327 from $1.6640.
Overseas, Tokyo’s Nikkei stock average rose 0.9%, Frankfurt’s DAX index rose 1.2% and London’s FTSE-100 rose 0.2%.
