Dow Flirts With 10,000 Mark as Broader Market Struggles
Not yet--but maybe very soon.
Wall Street’s run for the 10,000 mark on the Dow Jones industrial average lifted the index to within 65 points of that number Thursday, before midday selling clipped the advance.
The Dow still finished up 124.60 points, or 1.3%, at a record 9,897.44, though the broader market struggled to post even marginal gains.
Still, a surge in trading volume suggested more investors are piling into the market--or at least into the big-name stocks that dominate the Dow.
“In the short term . . . traders feel it’s inevitable that we will go to 10,000, and they are playing that dynamic to push the Dow higher,” said Richard Cripps, chief market strategist for investment firm Legg Mason in Baltimore.
The 30-stock Dow, which began the decade at 2,753 and crossed 5,000 for the first time in November 1995, has been powered in recent weeks by expectations that the continuing strength of the U.S. economy will boost earnings for many of America’s premier companies.
The Dow’s leading stocks since Feb. 28 have included American Express, Sears and Wal-Mart, all of which benefit from robust consumer spending.
The Commerce Department said Thursday that retail sales rose a strong 0.9% last month.
The index has also been boosted in recent days by Exxon and Chevron, which have gained as oil prices have risen on hopes that major oil exporters will soon cut production to end the global glut.
The Dow broke through the 9,800 and 9,900 marks by noon Thursday, peaking at 9,935.46 before pulling back.
In the broad market, the blue-chip Standard & Poor’s 500-stock index rose 0.8% to a record 1,297.68, and the New York Stock Exchange composite gained 0.9% to a record 611.67, its first new high since Jan. 8.
But winners outpaced losers by 17 to 12 on the NYSE, a disappointing margin.
And in the Nasdaq market, losers had a narrow lead over winners, while the Nasdaq composite index inched up just 0.3%.
Barton Biggs, strategist at Morgan Stanley Dean Witter, argued that the broad market’s relative weakness is a troubling sign, despite the Dow’s latest surge.
“I think that there are just too many divergences in terms of breadth, the fact that new highs really are not exceeding new lows” in the market, Biggs said in an interview on CNBC. U.S. stocks are not poised “for a new leg of this bull market,” he said.
Still, some analysts said strength in stock sectors such as banks, biotechnology and energy could be the start of a broadening advance.
What’s more, NYSE volume Thursday jumped to 909 million shares--the most since January.
The bond market stayed out of stocks’ way Thursday, as yields were mostly unchanged. Some traders said action in the bond market was slowed because of interest in the NCAA college basketball tournament, which began Thursday morning.
In commodity markets, near-term crude oil futures retreated 38 cents to $14.31 a barrel on speculation that oil ministers meeting in Amsterdam to negotiate output cuts are having trouble reaching an agreement.
After the markets closed, Mexico said the group of ministers would meet again today.
Among Thursday’s highlights:
* Auto stocks were strong, led by DaimlerChrysler, up $6.44 to $94.44; GM, up $1.81 to $89.69; and Ford, up $1.06 to $57.94.
* In the biotech group, Immunex jumped $6.25 to $169.75, Amgen rose $4.13 to a record $74.63 and Biogen was up $1.19 to $110.38.
* Technology was a weak spot, which has been the case for weeks as investors worry about a slowdown in computer sales.
Compaq fell $1.31 to $30.25, Dell lost $1.44 to $41.88 and Sun Microsystems dropped $2.19 to $108.88. But Intel rose $1.25 to $118.13 and IBM, a Dow stock, rose $1.38 to $182.88.
Shares were mixed in the Internet sector. Verticalnet soared $10 to $106.25 and Xoom.com surged $6.50 to $71.50, but EBay fell $5.06 to $150.
Many stock markets overseas are following the U.S. market higher. Japanese shares inched up, while South Korean stocks jumped 2.2%, British shares soared 1.5% and the Argentine market gained 1.8%.
Market Roundup, C6
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Dow Leaders
If the Dow Jones industrial average crosses 10,000 soon, it might owe that milestone to these stocks: These are the 10 stocks in the index that have led its March advance.
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Thurs. close Gain since Stock and change Feb. 28 American Express $123.50,+$5.88 +13.8% Sears 46.13, +1.13 +13.5% Dupont 58.13, +0.75 +13.3% Goodyear Tire 52.19, +1.50 +13.3% Exxon 74.75, +1.44 +12.3% Citigroup 65.94, +1.94 +12.2% Caterpillar 50.88, +1.88 +11.7% Chevron 85.06, +1.81 +10.7% Wal-Mart 95.31, +1.75 +10.7% AlliedSignal 45.50, +0.44 +10.0% Dow average 9,897.44, +124.60 +6.3%
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Source: Bloomberg News
