Dow Breaks 8,800 as Bad News Is Ignored
Blue-chip stocks shot past the 8,800 mark for the first time to notch their fourth consecutive record close Thursday after digesting a steady flow of negative news all day.
Bonds prices were mostly higher and the dollar hit another two-month high against the Japanese yen after a U.S. report showing that while the nation’s trade gap had widened overall in January, it had narrowed with Japan. The price of crude oil was little changed.
The Dow Jones industrial average closed up 27.65 points at 8,803.05, the first time above 8,800.
Broad indexes also rose to record highs, boosted by technology shares.
Larry Wachtel, a market analyst at Prudential Securities, said “an ocean of liquidity” continues to buffer any possible downturn in stocks, even in the face of wage inflation and lower earnings projections.
“This is simply an unrelenting bull market,” he said, “and where it ends, I really don’t know. Each time we pull back, people are conditioned to go in and buy.”
Advancing issues had a slim, 9-to-8 lead over decliners on the New York Stock Exchange. Volume was a 598.24 million shares, off from Wednesday’s pace.
The Standard & Poor’s 500 index posted its fourth consecutive high, adding 4.22 points to 1,089.74. The Nasdaq composite claimed its third closing high in four sessions, up 11.70 points to 1,799.98. The Russell 2,000 index of smaller stocks ended up 2.13 points at a record 474.31.
The NYSE composite index notched its fourth consecutive closing high, rising 1.76 points to 567.38.
Bond prices faltered after the Labor Department said the nation’s consumer prices, held in check by plummeting energy costs, rose a moderate 0.1% in February.
Investors liked the overall figure, but a 0.3% increase in the core rate, which excludes the food and energy sectors, caused some concern that the economy may be headed in an inflationary direction.
The U.S. trade report--showing the deficit shot up to $12 billion in January--was also disappointing to inflation worriers. Imports were down 1% in January, but exports fell even more, 2.6%.
The 30-year Treasury bond yielded 5.890%, little changed from Wednesday’s 5.89%.
Stock investors were largely unfazed by the trade news, as well as by a report that analysts at First Call Corp. have slashed their first-quarter earnings growth projections for Standard & Poor’s 500 index companies to 1.7% from 10.4%.
Stock buyers are “in denial about what is going on with earnings,” Chuck Hill, First Call’s director of research, said in an interview on CNBC on Thursday.
“The last time it got down that low was in 1991, when we were in a recession,” he said. “I think it’s a big red flag.”
Among Thursday’s highlights:
* On the down side, tobacco shares fell on expectations that an Indiana jury would decide against the industry in a secondhand-smoke lawsuit. Philip Morris fell $1.06 to $41.38; and Loews fell $1.63 to $104.38.
* In the technology sector, telecommunications shares gained.
WorldCom rose 75 cents to $44.25 in leading volume in Nasdaq trading after SBC Warburg Dillon Read started coverage of WorldCom, which is set to merge with MCI Communications this summer, at “outperform.” MCI rose 50 cents to $50.19.
American depositary receipts of British Telecommunications, which last year was outbid by WorldCom for MCI, shot up $5.50 to $112 after the company said it may expand its presence in the U.S.
* Oil stocks rose in reaction to higher oil prices. ADRs of British Petroleum were up $2.69 to $86.38. Atlantic Richfield rose $1.88 to $78.19.
* Rockwell International fell $6.06, or 10%, to $54.44 on the company’s warning that earnings for its second quarter will be below the 75 cents analysts expected. It blamed slowing sales and falling prices for semiconductors that go into computer modems.
* America Online Inc. fell $2.25 to $61.50 on heavy trading after Merrill Lynch downgraded it to near-term neutral from accumulate. AOL is facing new competition from MCI and Yahoo Inc.’s new online service.
In currency trading, the dollar ended higher at 130.70 yen from 130.11 yen at Wednesday’s close.
Overseas, London’s FTSE-100 index posted a record high, rising 1.6%. In Tokyo, the Nikkei stock average declined 0.31%.
late. AOL is facing new competition from MCI and Yahoo Inc.’s new online service.
In currency trading, the dollar ended higher at 130.70 yen from 130.11 yen at Wednesday’s close.
Overseas, London’s FTSE-100 index posted a record high, rising 1.6%. In Tokyo, the Nikkei stock average declined 0.31%.
