Dow closes above 8,000
The blue-chip average
is up 24 percent this yearNEW YORK -- The Dow Jones industrial average broke through the 8,000 barrier today, doubling its value in just 2-1/2 years with help from a growing economy and enthusiastic investors increasingly putting their savings in stocks. The Dow closed at 8,038.88, up 63.17 in the fifth-busiest day ever on the New York Stock Exchange.
"This is a five-star market," said J. Thomas Madden, chief investment officer at Federated Investors, which oversees $75 billion. "It's a time of great exuberance for investors. All mountains have peaks, but the global fundamentals look really good out into the 21st century. Long-term, the outlook is tremendous."
"Everything that can possibly go right is going right," said Edward Yardeni, chief economist at Deutsche Morgan Grenfell. "Profits have been extraordinarily strong." Yardeni, long one of the most bullish analysts, has forecast Dow 10,000 by 2000.
The Dow was propelled today by the same kind of sentiment that carried it past 6,000 in October and 7,000 in February. More evidence of a growing economy with low inflation, pushed bond market interest rates to their lowest level since December and gave the Dow a convincing lift over 8,000 at midday.
New figures released this morning by the Labor Department further convinced economists that inflation is not a threat. The Consumer Price Index rose a seasonally adjusted 0.1 percent last month, leaving the inflation rate at 1.4 percent for the first half of 1997.
The 8,000 mark, which brought the closely followed index to a 24 percent gain so far this year, appeared in doubt this spring as the Dow dropped 10 percent in a month and led many to question the market's strength.
This year's gains have already been about double what most experts had predicted for all of 1997.
On the New York Stock Exchange today, advancers led decliners by more than a 2-to-1 margin with 2,000 up, 925 down and 507 unchanged. NYSE volume was 646.00 million shares, the fifth busiest day ever.
The Nasdaq index posted its biggest one-day point gain ever, rising 38.52, or 2.5 percent, to 1,580.63. It has set a record in each of the past 10 sessions, rising nearly 10 percent in the period.
The Standard & Poor's 500-stock list rose 10.80 to 936.56, the NYSE composite index rose 4.25 to 485.24, and the American Stock Exchange composite index rose 3.08 to 638.03.
Along with other market measures like the Standard & Poor's 500 and Nasdaq composite indexes, the Dow has risen to new heights most recently on relief that the Federal Reserve hasn't raised short-term interest rates and expectations for solid quarterly corporate profits.
The markets today got support the bond market, where interest rates sank after the Labor Department's reported on inflation. A benign inflation backdrop has been a key factor underlying this year's phenomenal economic performance. The price of the Treasury's main 30-year bond rose 29/32 point while its yield fell to 6.47 percent from 6.54 percent late yesterday. Prices and yields move in opposite directions.