Investors Applaud Budget Deal; Dow Surges

Wall Street’s celebration of the federal budget deal turned euphoric Wednesday, propelling stocks further into record territory as bond-market interest rates sank to their lowest level in nearly 1-1/2 years.

The Dow Jones industrial average rose 80.36 to 8,254.89, plowing past 8,200 just two weeks after its first close above 8,000.

Broader stock measures also rallied to new highs, with the Nasdaq composite index pushing back into record territory for the first time in two weeks.

The Dow, which has set closing highs in six of the past seven sessions, has now risen 28 percent this year, tripling the return that many experts had forecast for all of 1997.

With several major economic reports looming in the aftermath of Tuesday’s record-setting advance, investors were prepared for a more sober tone on Wednesday.

The mood changed quickly, however, with an unexpected spark from bonds, which rallied because of the budget deal. The deal would presumably help the bond market by keeping government borrowing, and the supply of Treasury bonds, under control.

“It’s spillover joy that it’s a done deal,” said Robert Froehlich, chief investment strategist for Kemper Funds in Chicago.

Advancing issues outnumbered decliners by a 5-to-2 margin on the New York Stock Exchange, where volume was heavy again at 568.48 million shares as of 4 p.m., up from Tuesday’s busy pace.

Some of the stocks that moved substantially or traded heavily Wednesday:

NYSE

Alcoa, up 1-7/8 at 87-15/16.

Lehman Brothers analyst Richard Aldrich upgraded Aluminum Co. of America to “outperform” from “neutral.”

Columbia/HCA Healthcare, down 7/16 at 33-13/16.

Three Columbia/HCA executives were indicted in a sweeping investigation of overbilling of the federal Medicare program by the nation’s largest for-profit hospital chain.

Iomega, up 1-1/16 at 22-11/16.

The disk-drive maker filed a complaint in U.S. District Court charging SyQuest Technology with infringement of patents for technology used to make Iomega’s Jaz and Zip products.

NASDAQ

Apple Computer, up 7/8 at 17-3/8.

The troubled computer maker’s stock rose amid reports that Apple may name co-founder Steve Jobs chairman. The San Francisco Chronicle said the announcement might come at the Macworld Expo conference Aug. 6 in Boston.

Nextel Communications, up 3/8 at 23-3/8.

Cellular-phone pioneer Craig McCaw and his family exercised an option to buy 15 million shares of Nextel for $232.5 million. The move boosts McCaw’s holdings in Nextel to about 17 percent from about 12 percent.