Tempting Prices Give Dow A Boost
Blue-chip stocks rose modestly Friday, taking some measures to record highs, as prices apparently grew too attractive after less than two days of profit-taking on a monthlong rally.
The Dow Jones industrial average erased an early 57-point slide and rose 38.36 to 8,413.94, about 40 points shy of Wednesday’s record close. The Dow, which slid 75 points on Thursday to halt a six-session streak of records, gained 43.84 for the week and is now up more than 6 percent in 1998.
Other popular indicators also reversed course Friday afternoon to resume the market’s record-setting advance after the brief pullback. In keeping with the theme of that rally, the blue-chip dominated indexes attracted the most buying.
The Standard & Poor’s 500 and the New York Stock Exchange composite wiped out Thursday’s losses to finish at record highs. By contrast, the small-company laden Nasdaq composite posted a marginal gain despite another strong showing by Intel and Dell Computer.
Similarly, advancing issues barely outnumbered decliners, and the Russell 2000 index of smaller companies finished a shade lower.
“The money continues to gravitate into a narrower and narrower group of stocks,” said John Cleland, chief investment strategist at Security Benefit Group in Topeka, Kan. High values for blue-chip stocks should make a case for buying shares of smaller companies, he said.
“All the reasons for the market to sell off are still there,” said Cleland, noting the lingering uncertainty over how much the economic crisis in Asia is hurting profits at American companies. “Until those concerns are answered with first-quarter numbers, I just can’t make a case for the market to move to new high ground other than the (continuing flow of money into mutual funds).”
Since the rally took hold four weeks ago, the Dow has risen 713 points, or more than 9 percent. But the buying has clearly slowed, with the Dow gaining just 270 points during its six-session streak of record highs.
Advancing issues outnumbered decliners by an 8-to-7 margin on the NYSE, while the ratio was essentially even in Nasdaq trading.
The S&P 500 rose 5.93 to 1,034.21, its ninth record close in three weeks. The NYSE composite rose 2.48 to 537.49, squeaking past Wednesday’s record close of 537.23 for its 10th record in that 14-session span.
The Nasdaq composite rose 1.12 to 1,728.13, inching toward its Oct. 9 record close of 1,745.85. Intel rose 1-1/4 to 91-13/16, and Dell Computer rose 3 9/16 to 126-5/16.
The Russell 2000 fell 0.22 to 453.99, and the small-company dominated American Stock Exchange composite index rose 0.33 to 689.19.
NYSE volume totaled 594.30 million shares, on par with the brisk pace seen all week.
Overseas, Tokyo’s Nikkei stock average rose 0.8 percent, Frankfurt’s DAX index rose 0.4 percent and London’s FT-SE 100 rose 0.6 percent to a new high.