Dow Up 57.55, S&P; Hits New High as Bond Yields Slide
Blue chip stocks rose to record highs Thursday by one key measure, as Wall Street drew strength from falling bond yields and a stabilizing situation in Asia.
The Standard & Poor’s 500 index gained 8.03 points, or 0.8%, to a record 985.49, topping the previous record close of 983.79 set on Dec. 5.
The Dow Jones industrials rose 57.55 points, or 0.7%, to 7,973.02, still far below the record close of 8,259.31 on Aug. 6 but the highest finish since Jan. 5.
Meanwhile, today in Asia, the main South Korean stock index rocketed 7.6% to 558.01 by midday, its biggest gain ever, as a pact was reached to roll over $24 billion in bank debt. In the Philippines, the main share index soared 8.4% today. Most Asian markets, however, remained closed for holidays.
On Wall Street on Thursday, trading volume on the New York Stock Exchange zoomed to 754 million shares, the fourth-heaviest tally ever, as NYSE winners topped losers by 19 to 11.
Bolstered in recent days by some strong corporate earnings reports and a calmer perception of the crises in Asia and Washington, stocks drew an additional boost Thursday from the bond market, where interest rates sank sharply.
The bond market rally was powered by soothing comments from Federal Reserve Chairman Alan Greenspan, who in testimony before Congress stuck to his recent emphasis on the Asian economic crisis and its disinflationary impact on the U.S. economy, rather than focusing on a worrisome report earlier this week showing rising employment costs.
Greenspan’s comments helped send the yield on the bellwether 30-year Treasury bond down to 5.84% from 5.94% on Wednesday. Shorter-term yields also fell. The dollar also rallied against the German mark and Japanese yen.
The stock market’s glee over lower rates was evident: Thursday’s rally was broad-based, with the Russell 2,000 index of smaller stocks rising 0.8%, the same percentage gain as the S&P; 500.
Moreover, the heavy trading volume that has accompanied this week’s rally is a positive sign, many analysts say.
“To have heavy volume and prices going higher means that there are lots of participants and people are willing to pay up for stocks. That’s what makes rallies go,” said Richard A. Dickson, a technical analyst at Scott & Stringfellow in Richmond, Va.
Among Thursday’s highlights:
* Blue chips leading the market higher included many industrial issues, such as Alcoa, up $3.63 to $75.75; Exxon, up $1.56 to $60.75; Ingersoll-Rand, up $1.69 to $39.50; and Ford, up 81 cents to a record $50.75.
Those businesses may be helped most if the Fed refrains from raising interest rates any time soon. Wall Street seemed to assume from Greenspan’s comments that the Fed is content to sit still.
* Bank stocks also rallied, with J.P. Morgan up $1.94 to $103.44 and Citicorp up $1.56 to $118.44.
* The tech sector continued to show strong gains. Oracle surged $1.16 to $22.34, EMC rose $3 to $32.75, Lucent Technologies jumped $3.06 to $90 and IBM rose $1.19 to $98.19.
* A new stock offering, Keebler Foods, the cookie company, went public at $24 a share and surged to $26.81 on the NYSE.
* On the downside, Callaway Golf sank $3.19 to $27.13 after the golf club maker reported lower-than-expected earnings.
* A handful of real estate investment trusts were hurt by reports that the Clinton administration is seeking to take away these particular trusts’ tax advantage--an advantage that has helped them go on acquisition binges over the past year. Starwood Hotels sank $1.56 to $53.63, Patriot American lost $1.63 to $26.50 and Hollywood Park dropped $2.56 to $16.19.
Market Roundup, D6
