Economic News Pushes Stocks To Record High Lower Rates, More Jobs Put Investors In Bullish Mood

Stock prices passed another milestone Friday, driven higher by investors both confident of a stronger economy and fearful of missing out on a prolonged stock market rally.

After gaining more than 100 points in the previous three sessions, the Dow Jones industrial average added an additional 38.73 Friday to close at 4,702.73. The first close above 4,700 for the closely watched index came just two days after it first closed above 4,600.

For the week, the Dow gained 146.63 points, despite only 3-1/2 days of trading because of the July Fourth holiday.

Friday was one of the busiest trading days in history, with 466.54 million shares changing hands. More than twice as many New York Stock Exchange issues gained in price as lost.

It was “Christmas in July for everybody,” said Alan Ackerman, market strategist at Reich & Co. in New York.

Stocks that follow the economy’s ups and downs did particularly well. The Nasdaq composite index, which is heavily weighted with technology issues, and the Dow transportation index were sharply higher.

“Cyclicals have been astoundingly strong because the general expectation on Wall Street is that the economy is getting geared up to turn around again, with the housing sector leading the rebound,” said Thom Brown, an equity analyst at Rutherford Brown and Catherwook in Philadelphia.

After Thursday’s interest rate cut by the Federal Reserve, investors saw a Friday morning report on strong job growth as an indication that the economy will veer away from recession and head on to a long expansion.

But even if the jobs report had been weak, analysts say the market was poised to rally in anticipation of more interest rate cuts by the Fed.

“It seems all news is good news,” said Barry Berman, head trader at Robert W. Baird & Co.

As long as inflation remains low, the Fed will have the leeway to drop short-term interest rates further to stave off recession.