Dow at Record as Inflation Remains Caged
Blue-chip stocks moved up for the fourth straight session Wednesday, putting the Dow Jones industrial average in record terrain as the latest economic numbers confirmed inflation is no cause for concern, which should keep a lid on interest rates.
The Dow ended up 50.07 points at 9,211.84, its first close above the 9,200 level as it surpassed its May 4 record finish of 9,192.66.
But for the second day, declining issues led advances 1,515 to 1,429 in the broad market on active volume of 599 million shares on the New York Stock Exchange.
The Nasdaq composite index rose 6.02 points to 1,866.18.
The blue-chip advance hinged on strong bonds and gains in a selected number of stocks, analysts said.
“There is less there than meets the eye,” said Hugh Johnson, chief investment officer at First Albany Corp.
The rally was inspired by news that inflation remained caged last month. The market had been skittish because of worries that the Federal Reserve Board might raise interest rates if there are signs that the economy is overheating.
The producer price index for April edged up 0.2%, but it was still down 1.2% from last year. Excluding volatile food and energy costs, the core PPI also rose 0.2%.
In another report, retail sales in April rebounded from mild consumer spending in March, but the recovery was not as strong as expected and did not indicate any overheating of the economy.
The next measure of inflation will be the consumer price index for April due out today. The Fed’s policy-setting Open Market Committee will meet Tuesday to piece together the economic numbers and weigh monetary policy.
The betting is that the Fed will leave interest rates unchanged, with inflation running at its lowest since the 1960s.
Bonds were higher, relieved that interest rates would remain steady.
The yield on the 30-year Treasury bond fell to 5.94% from 5.97% on Tuesday.
Meanwhile, new violence in Indonesia following the deaths of six students shook Asian financial markets. The Jakarta stock index plunged more than 8% and Hong Kong’s Hang Seng index suffered its biggest point drop in more than two months.
Only Japanese and South Korean stocks bucked the trend and posted gains.
Among the day’s big movers, Microsoft was up $1.25 at $86.94 in NYSE trading after a court lifted a potential obstacle to the release of its Windows 98 operating system.
However, the federal government and 19 states were set to file an antitrust case against the software giant today, sources close to the lawsuit said.
“The immediate threat that people were concerned about was Windows 98 and Windows NT, and we know that’s not going to be a concern now,” said Esther Schreiber, an analyst at CS First Boston.
Analysts noted that Microsoft’s stock is well below its record high of $99.13 reached just last month and said investors were waiting to see how far-reaching the reported antitrust action would be.
The Standard & Poor’s composite index of 500 stocks rose 3.07 points to 1,118.86. The American Stock Exchange index slipped 0.59 point to 742.99.
The NYSE composite index of all listed common stocks rose 0.92 point to 579.20. The average share was up 8 cents.
The Wilshire Associates Equity Index--the market value of NYSE, American and Nasdaq issues--was 10,622.473, up 19.762 points, or 0.18%.
Overseas, Tokyo’s Nikkei stock average rose 0.1%, Frankfurt’s DAX index rose 1.5% and London’s FTSE-100 rose 0.3%.
Among Wednesday’s market highlights:
* Bellwether technology names led the stock advance. IBM rose $2.25 to $121.06 and Hewlett-Packard rose $1.75 to $81.63.
* Big gainers on the Dow included DuPont, up $2.31 to $81.88; American Express, up $2.06 to $105.44; and General Motors, up $1.94 to $75.06.
* Motorola surged $3.44 to $59.38 in heavy trading on speculation that Germany’s Siemens group was considering buying the company, but Siemens said it was not interested.
* C-Phone rose $6.94, or 247%, to $9.75 as the maker of picture-phone systems introduced its C-Phone ITV, a television set-top device that provides Internet access using a TV and a regular analog phone line.
* EchoStar Communications rose $3.50, or 13%, to $31 a day after the Justice Department moved to block Primestar from combining its satellite TV system with a fledging venture of News Corp.
* Cephalon fell $3.38, or 23%, to $11.38 as analysts said that the drug company’s Myotrophin drug for Lou Gehrig’s disease may not win final U.S. regulatory approval.
* Bed Bath & Beyond dropped $2.31, or 4.3%, to $51.94 after the home-furnishings retailer said that family trusts owned by Warren Eisenberg and Leonard Feinstein, co-chief executives of the company, sold 2 million shares pursuant to Rule 144 under the Securities Act of 1933.
* Bay Networks rose $3.19 to $27.75 and was the most active NYSE issue with more than 14 million shares traded on a report that the data network equipment maker told analysts it rejected a takeover offer from Canada’s Northern Telecom. NorTel was off $1.25 at $63.56.
* Callaway Golf, maker of the Big Bertha golf clubs, was off $2.31 at $20.44 after it warned of disappointing earnings for the second quarter, partly due to possible new restrictions on the use of modern, thin-faced metal woods.
* AutoZone rose 69 cents to $31.44 on this week’s news that it will acquire closely held Chief Auto Parts, increasing the number of AutoZone’s retail part stores to 2,500 from 2,000.
Market Roundup, D8
