Stocks Start Week With More Records
Stocks resumed their rally, with the Dow Jones industrial average ending above 8,700 for the first time, as investors drew encouragement from a confident assessment of the market by Warren Buffett.
The Dow advanced 116.33 points, or 1.3%, to 8,718.85, topping last Wednesday’s record of 8,675.75. In the broader market, advancing issues beat decliners 1,790 to 1,150 on active volume of 546 million shares on the New York Stock Exchange.
The Standard & Poor’s 500 rose 10.66 points to 1.079.27, its fourth new high in five sessions. The technology-heavy Nasdaq composite index rose 16.52 points to 1,788.18.
Meanwhile, crude oil prices slumped on the New York Mercantile Exchange to $13.28 per barrel, the lowest level since late 1988, amid a world supply glut. The slide in oil prices amid a lack of action by the Organization of Petroleum Exporting Countries to prop up prices was helping to keep the inflation outlook tame. (See Investor Spotlight, D14)
That outlook helped boost bond prices. The yield on the bellwether 30-year Treasury bond fell to 5.86% from 5.89% on Friday. Analysts said bond prices were also supported by Buffett’s bullish outlook on bonds and by a strengthening dollar. The dollar jumped to 129.64 yen from 128.15 on Friday.
The Dow has chalked a rise of more than 800 points, or 10.2%, so far in 1998, surpassing what most analysts had forecast for the entire year.
“It’s impossible to call a top in a market that’s as bubbly as this one. Could we see 9,000? If you asked me three weeks ago, I’d have said no. Ask me today, and I’d say, ‘Why not?’ But I don’t think it sticks,” said Charles G. Crane, chief market strategist at Key Asset Management, asserting that the economic crisis in Asia will put more of a squeeze on U.S. companies as the year progresses.
Among the big movers, Dow component J.P. Morgan rose $5.06 to $130.06 amid takeover rumors and positive comments from influential UBS banking analyst Thomas Hanley.
The NYSE composite index of all listed common stocks rose 4.77 points to 561.94, a new high. The average share was up 41 cents.
The Russell 2,000 index of smaller stocks rose 2.99 points to 471.76, its fourth consecutive record close after a five-month drought.
Among Monday’s highlights:
* On the Dow, American Express rose $1.69 to $93.94, Walt Disney rose $3.63 to $109.63 and Sears was up $2.75 at $59.13. McDonald’s was off $1.63 at $53 on news that Buffett had sold some of his stock in the fast-food company.
* WorldCom led the Nasdaq’s rise, gaining $2.56 to $41.88 after Salomon Smith Barney analyst Jack Grubman said its shares would reach $60 in 12 months and $90 in 24 months.
* Eastman Kodak rose $1.81 to $62.56 after the company said it expected a tough first quarter but that 1998 as a whole will show significant improvement over 1997.
Market Roundup, D14
* VARYING VIEWS: Stocks’ rally deepens disagreements over market’s future. A1
