Dow Roars to New High, Tickling 9,000
The stock market turned in a breathtaking performance Thursday as continued optimism about inflation and corporate profits pushed the Dow industrials to a new closing high and within a whisker of its first finish above 9,000.
The Dow Jones industrial average closed up 118.32 points at 8,986.64, after coming within 3 points of 9,000 in the last 15 minutes of trading. It handily surpassed the previous high of 8,906.43 reached March 20.
The Nasdaq composite index rose 5.30 points to 1,852.96, and the Russell 2,000 index of smaller-company stocks rose 1.50 points to 486.43, both setting records for a third straight day.
Bonds also rose. The key 30-year U.S. Treasury bond climbed 17/32, or $5.3125 on a $1,000 bond. Its yield, which moves in the opposite direction, fell to 5.84% from 5.88%.
The rise in the Dow extended its winning streak to three sessions and was the strongest since March 6, when it rallied 125.06 points.
The focus was on big names among the blue chips.
Among the Dow industrials, American Express gained $2.06 to $94.44, IBM rose $1.44 to $105.81 and Johnson & Johnson rose $2.88 to $76.19.
The across-the-board momentum in stocks was driven by continued expectations for moderating growth and low inflation--a scenario that would keep the Federal Reserve from raising interest rates and preserve corporate profits.
“There’s just a tremendous amount of momentum in the market because we have had near-perfect conditions,” said Mary Farrell, senior investment strategist at PaineWebber in New York. “Today it’s just more of the momentum that we have come to expect.”
While it removed one uncertainty hanging over the market, analysts said investors shrugged off the dismissal of Paula Jones’ sexual-harassment lawsuit against President Clinton.
The focus was more on economic fundamentals, profits and a rally that fed off itself.
Even though the market continues to signal optimism about the outlook for profits, there is some nervousness as some companies issue dire warnings and investors wait to see if Asia’s financial storm will take a more sizable swipe at the U.S. economy.
The building caution about profits can be seen in a migration by investors toward big-name companies and market sectors that tend to hold their own even in bad times. Some of Thursday’s big gainers were drug companies, household products manufacturers and banks.
“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.”
Advancing issues outnumbered decliners by an 11-to-7 margin on the New York Stock Exchange, where volume totaled a brisk 674.34 million shares, up from Wednesday’s 672.51 million.
The Standard & Poor’s 500 stock list rose 11.86 points to 1,120.01; the NYSE composite index added 5.63 points to 582.04, and the American Stock Exchange composite index rose 2.88 points to 747.03, all reaching new highs for a second straight day.
Among Thursday’s market highlights:
* Managed-care companies rose after Kaiser Permanente said it would raise California rates significantly after several years of small or no increases. Coventry Health Care jumped $1.31 to $17.50, while United HealthCare rose $4.06 to $68.63.
* 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.
* Respironics fell $10.69 to $18.38 after warning that its third-quarter revenue and earnings would fall short of analysts’ estimates.
* DSC Communications slid 63 cents to $17.38 after the maker of phone equipment said it expects a first-quarter loss because of slower orders from the U.S. and Asia.
Market Roundup, D6