Inflation News Pushes Dow Back Above 8,000

After two weeks of false starts, the Dow Jones industrial average finally pushed back above 8,000 on Wednesday as the first major taste of September’s economic data upheld the outlook for both low inflation and interest rates.

The Dow rose 70.24 to 8,015.50, its first finish above 8,000 since Aug. 20. The blue-chip barometer is now up more than 24 percent in 1997, but still sits about 240 points below its Aug. 6 peak of 8,259.31.

Several broad market indicators rose to record highs on Wednesday as interest rates approached the lowest level in more than 1-1/2 years in the bond market, which rallied after a report suggesting that inflationary pressures at the nation’s factories didn’t worsen last month.

Early Wednesday afternoon, it looked as if the Dow would perform what’s become a familiar stunt over the past two weeks, springing above 8,000 only to conduct a hasty retreat. This time, however, after surrendering nearly all of an early 72-point gain, the blue-chip barometer reversed course and rallied over the final two hours of trading.

Smaller company shares extended their record-setting rally. The Russell 2000 index of smaller companies closed at a record high for the third straight session and 20th time in 25 sessions.

Advancing issues outnumbered decliners by a nearly 2-to-1 margin on the New York Stock Exchange, where volume totaled 597.89 million shares as of 4 p.m., up slightly from Tuesday’s busy pace.

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

NYSE

Advanced Micro Devices, down 5-9/16 at 27.

The chip maker warned late Tuesday its third-quarter operating loss will be substantially wider than expected due to disappointing production of its new K6 microprocessors.

Barnes and Noble, up 2-1/4 at 30-1/2.

Merrill Lynch named the book retailer its “Focus One” stock for the week, the Dow Jones News Service reported.

Imation, down 2-5/16 at 24-1/4.

The supplier of imaging and computer industry products warned late Tuesday that its third-quarter earnings will be below expectations because of unfavorable currency exchange rates, product transitions and continued competitive pressures.

NASDAQ

MCI Communications, up 5-7/8 at 35-1/4.

WorldCom, down 1 at 34-3/8.

British Telecommunications (NYSE), up 5-7/8 at 72-1/2

Brooks Fiber Properties, up 8-1/4 at 54-15/16.

WorldCom moved to outbid BT with a hostile $29.4 billion offer to acquire MCI. WorldCom also announced an agreement to acquire Brooks, which sells local-phone services to businesses, in a $2.9 billion deal.