Stocks Again Set Records; Bonds Steady

A closely watched index of small-company stocks hit its first new high since October on Wednesday, as this year’s spectacular market advance continued to broaden.

The Russell 2,000 index of smaller issues rose 2.50 points, or 0.5%, to a record 467.12, topping the previous record close of 465.21 set Oct. 13.

The new high was matched by record finishes Wednesday by the blue-chip Dow industrial average and Standard & Poor’s 500 index, which rose 32.63 points to 8,675.75 and 4.22 points to 1,068.47, respectively.

“The tidal wave of money that continues to flow into the market forces equities up,” said Woodrow Uible, director of equity investments at Bartlett & Co. in Cincinnati, which oversees $2.8 billion. Investors are “believing in the long-term viability of stocks.”

Fundamentally, this year’s rally has been fueled by “a waning of concerns” about the economic crisis in Asia “and the reality that the [U.S.] economy has proved to be stronger than expected,” said John Shaughnessy, chief investment strategist at Advest Inc. in Hartford, Conn.

Stocks also hit new highs in many European markets Wednesday, including France, Sweden, Belgium, Switzerland, Ireland and Portugal. Europe’s economy also has been stronger than what analysts had projected.

The U.S. market overall was choppy Wednesday but still saw 1,772 issues rise on the New York Stock Exchange, while 1,233 fell. Trading was active.

The technology-heavy Nasdaq composite index rose 8.34 points to 1,756.85, but it still sits about 20 points below its peak reached Feb. 26--before tech bellwethers Intel, Compaq and Motorola warned of weak first-quarter earnings.

Analysts were cheered by the Russell’s rise to new highs because that suggests that more investors are shopping for laggard small stocks as blue-chips reach extraordinary levels relative to underlying earnings per share.

“The market’s in good shape and it’s going to keep going up,” said Bill Allyn, director of trading for Jefferies & Co. in Short Hills, N.J. “There’s just a lot of money around. It’s just brute force. It just keeps pushing stocks.”

The bond market had a benign session again, providing support for stocks. The yield on the 30-year Treasury bond eased to 5.94% from 5.95% on Tuesday.

Treasuries were boosted by a stronger dollar on news that a senior Bank of Japan official had been arrested for allegedly leaking market information. The news also helped push Japanese bond yields to record lows on the assumption that the Japanese economy’s woes will continue.

Among Wednesday’s highlights:

* Many telephone stocks were strong, including AT&T;, up $1.50 to $64.19; SBC Communications, up $1.19 to $78.50; GTE, up $1.38 to $55.94; and Bell Atlantic, up $1.88 to $95.63.

* Tech stocks were mixed, with Apple up $2.06 to $26.13, FileNet up $3.72 to $38.13 and Lucent up $3.25 to $111.56, while Dell lost $1.19 to $64.

Hewlett-Packard eased 88 cents to $60.63. Late in the day, HP Chairman Lewis Platt said excess inventory at competing computer companies will hurt HP’s gross profit margins and put pressure on prices for the next several months.

* Computer Sciences shot up $4.69 to $101.63 on speculation the company would receive a fresh takeover bid or buy back shares through a self-tender. The company has rejected an offer from Computer Associates.

Market Roundup, D8