Dow breaks record high
The closing level of 8,295.61Star-Bulletin news services
comes nearly four months after its
biggest one-day plunge
NEW YORK -- The Dow Jones industrial average closed at a record high today, nearly four months after its biggest one-day point drop and six months after hitting its last peak.
The Dow, at one point up 139.51 points at 8,320.03 -- its highest level ever -- closed with a gain of 1.4 percent, or 115.09, at 8,295.61.
The old intraday record of 8,299.49 was reached on Aug. 7, one day after the Dow made its record close of 8,259.31. It was during last summer's heady days for the market that the earliest whiffs emerged of an economic crisis in Asia.
The situation in Asia continued to deteriorate into autumn, pushing world markets into a tailspin by late October and chopping a single-day record 554 points off the Dow on Oct. 27.
The Dow fell 13 percent from its August high to its low on Oct. 27.
Stocks rallied this month after better-than-expected fourth-quarter earnings and generally positive comments from companies about coming quarters.
"The market had a spasm of panic and then realized it was a mistake," said George Cohen, chief investment officer at Cohen, Klingenstein & Marks, which manages $1.5 billion in growth stocks.
Cohen held on to his shares of Intel Corp., Cisco Systems Inc. and Compaq Computer Corp. through the decline.
The rally got fuel recently from the traditional inflow of money in January as investors stashed year-end bonuses into retirement accounts, he said. Mutual fund managers held the cash longer than usual, waiting for signs that the worst of the Asia effect had passed.
Investors got more good news on the U.S. economy when the Labor Department said worker productivity rose more than expected in the fourth quarter. Higher productivity keeps prices down, allowing interest rates to stay low. That, in turn, means economic growth and higher corporate profits.
"The thing that's been driving this bull market since 1982 is moderate economic growth, low inflation and lower interest rates," said Michael Wolf, who helps manage $9 billion for American Express Asset Management Group Inc. in Minneapolis.
Broad-market indicators also posted sizable gains in busy trading today, with the Standard & Poor's 500 and the New York Stock Exchange composite quickly erasing yesterday's losses and moving back to record territory.
The gains came as no immediate threats to the market have erupted from Wall Street's leading concerns: the economic crisis in Asia, the political crisis at the White House, and a potential military clash with Iraq.
President Clinton this morning said the economy is strong enough to withstand the Asian crisis and well-equipped to handle any further troubles from the region.
Advancers beat decliners by a 9-to-5 margin on the New York Stock Exchange today , with 1,850 up, 1,013 down and 589 unchanged. NYSE volume totaled 641.50 million shares vs. 524.08 million yesterday.
The S&P 500 list rose 8.27 to 1,019.01, and the NYSE composite gained 3.99 to 529.96, putting both measures above Friday's closing record.
The Nasdaq composite index, dominated by a technology sector believed most vulnerable to the trouble overseas, climbed 18.61 to 1,709.04, marking its first close above 1,700 since before the October selloff.
The Russell 2000 index of smaller companies edged ahead 3.91 to 451.19, and the small-company dominated American Stock Exchange composite index rose 5.62 to 686.04.
The price of the Treasury's main 30-year bond was up 5/16 point, or $3.121/2 per $1,000 in face value, around midday, while its yield fell to 5.92 percent from 5.94 percent late yesterday. Prices and yields move in opposite directions.
Overseas, Tokyo's Nikkei stock average edged slightly higher; Frankfurt's DAX index fell 0.9 percent and London's FT-SE 100 rose 0.2 percent.
Yesterday, stocks pulled back slightly as investors locked in some gains in bellwether technology shares and other blue-chip issues that have led the recent rally.