Dow Starts the Week With Another Record at 9,192
A late downturn on Wall Street wiped out most of the day’s gains Monday, nearly denying the Dow Jones industrial average a new record, as lofty stock prices re-emerged as the market’s chief concern.
The Dow Jones industrial average rose by as much as 115 points, but retreated over the final hour to close 45.59 points higher at 9,192.66, barely topping April 21’s record of 9,184.94.
Some broad-market measures flirted with new highs in the morning, but the advance quickly deteriorated into a blue-chip affair, resuming what analysts called a worrisome trend.
“Money managers are aware of the lofty levels of the market, and most want to be more selective about their purchases and wait for pullbacks,” said Dan Ascani, president of Global Market Strategists of Gainesville, Ga. “The rally is becoming narrower day by day--even the S&P; 500 is lagging the Dow. That’s typically a sign of a very mature bull phase. We’re expecting a peak fairly soon.”
Bonds were little changed amid speculation that reports this week, including the April employment numbers on Friday, will show the economy is robust. The yield on the benchmark 30-year Treasury bond was unchanged at 5.93%.
Stocks opened the day strong amid continued optimism from late last week, when a timely stream of data reinforced the bull market’s long-running theme of steady growth without inflation. That data quickly overshadowed last Monday’s reports that the Federal Reserve Board might boost interest rates to ease pricing pressures by slowing the economy.
Among the major reports due this week, Friday’s reading on April payroll and wage levels--two key forces behind inflation--is the most critical.
Union Carbide rose $3.31 to $51.50 to lead the Dow’s advance after a British newspaper reported that the chemical maker had spurned a merger bid by British Petroleum. The Dow also drew a boost from Eastman Kodak, up $2.81 to $76.19, and 3M, up $1.88 to $96.69.
“Even among the big stocks, the buying is getting narrower,” said Larry Rice, chief investment officer at Josephthal & Co. “Going back a few weeks, it seems that the Dow is being buffeted by only a few stocks a day. That tells me that we’re in the very late phases of rally here.”
Advancing issues outnumbered decliners by a small margin on the New York Stock Exchange, where volume totaled 551,700,000 shares, even lower than Friday’s modest 581,970,000 shares.
The Standard & Poor’s 500 rose just 1.07 points to 1,122.07 after retreating from a brief foray above April 22’s record of 1,130.54. Similarly, the NYSE composite index finished just 0.82 of a point higher at 582.73 after flirting with a new high.
The Nasdaq composite index rose 5.42 points to 1,878.86, thanks largely to a sharp advance by Dell Computer, up $3.75 to $88.
The Russell 2,000 index of smaller companies rose 0.52 of a point to 485.26, while the American Stock Exchange composite index fell 1.06 points to 748.80.
Oil prices drifted lower amid reports that the oil ministers of Saudi Arabia, Venezuela and Mexico would probably meet this week to explore new ways to buoy sagging oil prices.
At the New York Mercantile Exchange, crude oil for June delivery closed 18 cents lower at $15.95 a barrel.
Overseas, Frankfurt’s DAX index rose 4.1%. Japanese and British markets were closed for holidays.
Among the highlights Monday on Wall Street:
* Internet stocks rallied again, helped by sharp gains at America Online Inc., whose chief financial officer was quoted in Barron’s newspaper as saying that the stock is worth almost $150 per share. America Online closed up $5.13 at $89.
* Walt Disney Co. rose $1.44, or 1.1%, to $127.13 as the entertainment and media company’s “He Got Game” movie took the top spot at the box office on its first weekend, with estimated ticket sales in the U.S. and Canada of $8.1 million, giving the studio a much-needed boost.
* Yahoo Inc. rose $2.25, or 1.9%, to $120.88 as the Internet company introduced Yahoo Chinese, its Chinese-language Internet guide, enabling it to reach Chinese speakers worldwide, the company said.
* PeopleSoft Inc. rose $1.81, or 4.1%, to $46.19 after the software company said it amended its stockholder-rights plans to increase the exercise price of its rights to $190 a right from $22.50, and making other changes.
