Major Indexes Hit New Highs in Broad Rally

U.S. stocks staged a broad advance Wednesday, lifting key indexes to record levels, as cash continued to pour into a market that two months ago looked like it might run out of fuel.

The Dow industrials surged 87.68 points, or 1.1%, to a record 8,457.78, surpassing the previous peak of 8,451.06 set Feb. 18.

The Standard & Poor’s 500 index rose 1.2% to 1,042.90 and the Nasdaq composite gained 1.6% to 1,766.48. Both were new highs.

“The individual has been controlling the market, and they continue to pour money into mutual funds,” said Philip Schettewi, chief portfolio strategist in the Washington office of Loomis Sayles & Co., which manages $4.2 billion.

An estimated net $5.31 billion funneled into stock funds in the one-week period ended Monday, up from about a net $945 million in the prior week, according to Trim Tabs Financial Services, which tracks mutual fund money flows.

There was little in fundamental news to drive stocks higher Wednesday. Federal Reserve Chairman Alan Greenspan, in a second day of testimony to Congress on the economy, essentially repeated his remarks from Tuesday: He expects Asia’s crisis to have an effect on the U.S. economy, but not a major effect, so the Fed isn’t cutting interest rates.

However, if the Fed has miscalculated, and the U.S. economy suffers worse than expected, Greenspan said the Fed would act appropriately to help the economy.

In the bond market, where yields rose across the board on Tuesday, they slipped on Wednesday. The 30-year Treasury bond yield eased to 5.92% from 5.95% on Tuesday.

The Treasury auctioned new five-year notes at an average yield of 5.61%.

The stock market owned the spotlight Wednesday. Winners topped losers by more than 2 to 1 on the New York Stock Exchange and by 25 to 18 on Nasdaq. Trading volume, however, remained basically on par with the more moderate action of recent sessions.

Among Wednesday’s highlights:

* Bank stocks led the charge, helped by Greenspan’s comments that the banking system appeared sound. Also, the Supreme Court ruling on credit unions was positive for banks.

Citicorp gained $1.19 to $127.38, BankAmerica rose $2.69 to $77.50, Imperial Bancorp rose $1.56 to $32.81 and Wells Fargo gained $4 to $319.50.

Also, Chase Manhattan rose $2.63 to $122.38, even though well-known investor Michael Price said late Wednesday that he trimmed his position in the shares a bit last year. He still “loves” the stock, a spokesman said.

* In the tech sector, Microsoft surge $2.81 to $84.94, lifting the firm’s market capitalization above the $200-billion mark.

Other tech winners included IBM, up $2.75 to $105.25, Xylan, up $2.31 to $26.13, Micron Technology, up $2.38 to $34.75, and Hewlett-Packard, up $2.06 to $64.63.

* Cyclical industrial stocks were strong, as investors hunted for relative bargains. Dupont rose $1.19 to $59.81, Ford Motor was up 94 cents to $55.56, United Techologies gained $2.69 to $87.50 and B.F. Goodrich jumped $1.56 to $48.50.

* On the downside, one of the day’s big losers was Dura Pharmaceuticals, which tumbled $14.19 to $23.94 following a warning of significantly reduced 1998 earnings.

In foreign trading, Mexico’s main share index rocketed 3% to 4,740, helped by Wall Street’s surge. Stocks were mostly higher across Europe and Asia as well.