Dow Hits 8,451; State Bond Sale Nears $1 Billion
The seemingly unstoppable Dow Jones industrial average made it six records in a row Wednesday, gaining 52.56 points to 8,451.06 as blue chips again led the broad market higher.
Elsewhere, the state of California sold nearly $1 billion in new general-obligation bonds, in one of the municipal bond market’s biggest deals this year.
On Wall Street, investors bid up many drug, energy, technology and industrial issues, while continuing to exit utility shares and real estate investment trusts--equities that had functioned as “safe havens” in recent months amid worries over the bull market’s health.
With Asia’s economic crisis having stabilized, bond yields low and fourth-quarter corporate profits overall coming in better than expected, investors again see good reason to be buying stocks, analysts say.
“The business environment in the U.S. is awesome,” said George Wild, director of research at Heartland Capital in Indianapolis, which manages $1 billion.
The Dow was joined at a record by the Standard & Poor’s 500, which rose 0.9% to 1,032.08, and by the New York Stock Exchange composite, which rose 0.8% to 537.23.
Winners outnumbered losers by 17 to 12 on the NYSE and by 21 to 20 on Nasdaq. The Nasdaq composite index gained 0.7% to 1,715.73, but it is still shy of its record of 1,745.85 set last fall.
Analysts said the market’s momentum, with the Dow already up 6.9% year-to-date, appears to be getting stronger. “It’s very painful to own cash and watch the market rally at this rate,” said Alan Skrainka, strategist at brokerage Edward Jones.
Wall Street viewed as positive the government’s report that wholesale prices overall fell 0.7% in January. Though some economists warn that deflationary forces at work in the world economy could ultimately be detrimental to corporate profits, for now the absence of inflation suggests that interest rates could go lower.
Surprisingly, though, the bond market didn’t rally on the inflation report. The yield on the bellwether 30-year Treasury bond edged up to 5.83% from 5.79% on Tuesday.
Bond investors had to contend with heavy new supplies of securities, including California’s $990-million sale of tax-free general-obligation bonds. The sale was a “refunding,” meaning a refinancing of higher-cost state debt, to save the state about $92 million in interest expense over time.
BancAmerica Robertson Stephens won the California bonds in a competitive auction and reserved the bulk of the sale for buyers it already had lined up. Of the 25 maturities in the offering, only nine were made available to other investors. The new bonds carried tax-free yields ranging from 5.04% for bonds maturing in 2020 to 4.7% on bonds maturing in 2012.
Among Wednesday’s highlights:
* Energy stocks rallied as near-term crude oil futures rebounded from Tuesday’s four-year lows, after Saudi Arabia suggested oil exporters may agree to cut production. Exxon gained $1.69 to $63.81, Western Atlas gained $2.25 to $71.44 and Texaco rose $1.44 to $56.
* Intel led tech shares higher, up $2.31 to $86.94. The Morgan Stanley high-tech stock index rose 1.1%.
* Drug stocks surged, with Merck up $4.38 to $124.25 and Johnson & Johnson up $1 to $70.50.
* Steelcase rocketed $5.63 to $33.63 in its first day of trading. The maker of office furniture sold 12.15 million shares at $28 in its initial offering.
* Among Southland stocks, Diagnostic Products fell $2.25 to $27. The medical products company reported diluted fourth-quarter earnings of 26 cents a share, down from 40 cents a year earlier.
In foreign trading, many Asian markets were sharply higher despite continuing worries about Indonesia.
Market Roundup, D8
