Closing Market Report

Star-Bulletin news services

Monday, May 3, 1999

Dow rockets past 11,000

The high-flying, blue-chip index
records the fastest rise ever
between 1,000-point milestones

NEW YORK -- The milestones just keep tumbling.

Two more reports of an ebullient economy pushed the Dow Jones industrial average past 11,000 today. The index of 30 blue chip stocks closed at 11,014.69, up 225.65 for the session and marking its fourth new high in five trading sessions.

The Standard & Poor's 500 composite rose, but the Nasdaq composite declined as investors continued to shed technology shares.

Even by the compressed standards of the modern stock market, the latest Dow milestone arrived with remarkable speed. The index closed at 10,000 on March 29, making today's close the fastest rise between 1,000-point markers in history. By comparison, it took four months, from October 1996 until February 1997, to move the Dow 16 percent from 6,000 to 7,000.

"It is truly remarkable; it's breathtaking," said Hugh Johnson, market strategist at First Albany Corp. "I didn't suspect that I would be talking about Dow 11,000 this year, let alone at the beginning of May."

The S&P 500 rose 19.45, or 1.45 percent, to 1,354.63, but the Nasdaq composite index fell 7.27 to close at 2,535.58.

Advancers beat decliners by a 2-to-1 margin on the New York Stock Exchange, with 1,999 up, 992 down and 535 unchanged. NYSE volume totaled 809.93 million shares vs. 934.4 million Friday.

The NYSE composite index rose 9.88 to 644.18, and the American Stock Exchange composite index gained 9.70 to 786.67. The Russell 2000 index of smaller companies rose .47 to 433.28.

The Dow was pushed higher by manufacturing and industrial shares after investors got two fresh reminders that the economy is strong, but not inflationary. The National Association of Purchasing Management's index of manufacturing activity declined 1.5 percentage points, to 52.8 percent, in April. That indicated that the manufacturing sector is expanding, but at a slower rate. Analysts had expected the index to rise 2.2 percent.

And the Commerce Department reported that Americans' personal income rose 0.4 percent in March, but their spending kept pace, leaving the nation's savings rate at a record low.

After the purchasing managers' report, bond prices erased early losses. The 30-year Treasury bond fell 1/32 point, or 31 cents per $1,000 security, to yield 5.66 percent. Bonds earlier fell as much as 17/32, adding to Friday's almost-2-point rout. That briefly boosted yields to 5.7 percent, the highest in two months.

The strength in the bond market helped push manufacturing stocks higher, said William Meehan, chief market analyst for Cantor Fitzgerald.

"We got a nice bounce off the (manufacturing) report, which came in a little bit weaker than expected," Meehan said.

The Dow was led higher by such industrial stalwarts as Minnesota Mining & Manufacturing, United Technologies and Goodyear.

Oil stocks, which have benefited lately from strong oil prices, were also winners today.

Financial stocks were mixed. Dow component American Express was up, but Citigroup was down. Richard Cripps, chief market strategist for Legg Mason in Baltimore, said that was a sign that the stock advances may not hold.

"The financials are one of those groups that we probably should watch here because they are an indicator of what the bond market is likely to do," Cripps said. "I'd say their mixed showing is not a strong indicator that this market can continue to go higher. It could be an indication that the Dow is overstating" the market's strength.

Meanwhile, Internet stocks took a drubbing as investors continued last week's strategy of taking profits. America Online was down in leading volume on the New York Stock Exchange. Microsoft was sharply lower in leading Nasdaq volume.

E-mail to Business Editor

Text Site Directory:
[News] [Business] [Features] [Sports] [Editorial] [Do It Electric!]
[Classified Ads] [Search] [Subscribe] [Info] [Letter to Editor]
[Stylebook] [Feedback]

© 1999 Honolulu Star-Bulletin