Dow Roars to New High, Tickling 9,000

U.S. stocks soared to new highs Thursday amid another breathtaking blue-chip rally, indicating that cash continues to pour into the market despite its lofty heights.

The Dow Jones industrials rocketed 118.32 points, or 1.3%, to a record 8,986.64, topping the previous peak of 8,906.43 set a week ago.

The Dow nearly hit 9,000, reaching 8,997.11 before backing off in the final few minutes.

Trading was heavy on the New York Stock Exchange, at 674 million shares, as winners topped losers by 18 to 12.

“Money is chasing money,” said William O’Connor, manager of Milwaukee-based Marshall Large-Cap Growth & Income Fund, which has $335 million in assets. “Money managers don’t get paid to sit on cash, so they’re putting it into stocks that are going up. The pressure to perform is very high.”

As individual investors continue to shovel cash into mutual funds, “Money managers are looking for places where they can deploy their money real quickly,” said Timothy Stevenson, who oversees about $400 million at First Capital Group. That generally means big, blue-chip stocks.

The broad market wasn’t as strong on Thursday, even though most major indexes hit records with the Dow. The Nasdaq composite index inched up 5.30 points, or 0.3%, to a record 1,852.96, as winners barely topped losers on Nasdaq.

“Even though the stock market is going up, investors are playing it safer and safer,” said Hugh Johnson, chief investment officer at First Albany. “They are buying the stocks of companies that tend to post good earnings when the economy slows.”

Indeed, leaders in recent days have included such classic growth names as Coca-Cola, which rose 50 cents to a record $81.13 on Thursday, and Procter & Gamble, up $2 to $89.56.

Investors continued to be encouraged by economic data that suggest the U.S. economy remains in expansion mode, despite the negative effects of the Asian economic crisis.

Meanwhile, yields are falling in the bond market, thanks in part to a strong dollar that is encouraging foreigners to buy U.S. assets.

On Thursday the bellwether 30-year Treasury bond yield fell to 5.84%, down from 5.88% on Wednesday and the lowest since Feb. 18.

“The bond market has nothing to fear,” said Alan Koepplin, who helps manage about $2 billion in fixed-income securities at Cowen Asset Management. “The economy is strong and inflation is dead.”

Still, markets will face a test today, when the government reports on March employment data. Analysts will be closely watching the average-wage figure for signs that wage inflation is increasing rapidly--a possible precursor to price inflation.

Among Thursday’s highlights:

* Blue-chip winners included American Express, up $2.13 to $94.50; Boeing, up $2.19 to $54.94; GE, up $1.31 to $87.75; IBM, up $1.38 to $105.81; McDonald’s, up $1.44 to $62.88; and Disney, up $2.88 to $108.88.

* Major drug stocks also were red-hot. Johnson & Johnson gained $2.88 to $76.25. The company’s no-calorie sweetener Sucralose won U.S. Food and Drug Administration approval as the first artificial sweetener since Monsanto Co.’s Nutrasweet.

Also in the drug group, Merck rose $2.50 to $132.38, Warner Lambert gained $4.94 to $178.94, Abbott Labs gained $1.38 to $77.38 and Schering-Plough surged $2.50 to $84.31.

* Health-maintenance organization stocks rose after Kaiser Permanente said it would raise California rates significantly after several years of small or no increases. United HealthCare rose $4.06 to $68.63 and Wellpoint Health gained $1.88 to $69.13.

* On the downside, Security Dynamic Technologies plunged $15.56 to $26.94 after the network and data security company said its first-quarter results will fall short of its operating plan. Also, Respironics fell $10.69 to $18.38 after warning that its quarterly sales and earnings will disappoint.

Market Roundup, D6