Stocks soar to gain of 71.54 points Rise is 10th biggest for Dow industrials

February 12, 1991|By Knight-Ridder Financial News

The Dow Jones industrial average soared 71.54 points on the New York Stock Exchange yesterday, smashing through its fifth century mark in four weeks to close at 2902.23 in heavy volume.

The gain was the 10th largest for the bellwether 30-stock average and put it less than 100 points away from the record-high closes of 2999.75 set July 16 and July 17. It also returned the Dow to its level just before the Iraqi invasion of Kuwait on Aug. 2.

Among Big Board-listed stocks, winners trampled losers by more than 4-to-1. And volume on the New York exchange was strong once again at 265 million shares, up sharply from 187 million Friday.

Since Jan. 9, the Dow Jones industrials have soared 431 points, or 17.5 percent.

"It almost looks like there's no end to this explosive rally," said veteran trader George Pirrone at Dreyfus Corp. "Of course, that's the point where you should probably be getting a little nervous.

"My guess is we go a little higher, then have a fairly shallow pullback," Mr. Pirrone said. "I think any pullback will be shallow because there are still a lot of people who haven't bought into this market, and they're patiently waiting for an opportunity to do so."

Yesterday's rally, seen as basically a continuation of last week's 100-point advance amid heavy volume and many more stocks rising than falling, has been helped by continued expectations of ever lower U.S. interest rates.

Those expectations are, in part, based on conclusions by investors over the weekend that Friday's Federal Reserve report on U.S. banks clearly indicates a continuing credit crunch, which the Fed must address with easier monetary policy.

The characteristics of last week's market also tended to convince fence-sitters that the 1991 bull market is for real and no longer represents a bear-market rally within the downtrend that began in July 1990.

The string of consecutive sessions with more than 200 million shares traded on the NYSE became the second longest in market history last week, surpassed only by the late-October 1987 buying binge of high-volume days as bargain hunters flocked into the market after the Oct. 19 crash.

"The next stop looks like Dow 2,900-2,950," said technical trader Frank Gretz at Shields & Co. at midday, when the Dow was still at 2,870. "What we've seen is a 'breadth stampede' as the secondary stocks have soared while the old blue-chip, late 1980s leadership -- the Philip Morris' and Coca-Cola's -- have remained in their strong bull trends.

The broader NYSE index -- which has outperformed the Dow on many occasions since the explosive rally began in mid-January -- finished at 200.85, one point below its all-time closing high.

As measured by Wilshire Associates' index of more than 5,000 actively traded stocks, the market increased $77.95 billion, or 2.29 percent, in value.

Standard & Poor's 500-stock index surged 9.22, to 368.57, just below its record high of 368.95 last July. The New York Stock Exchange composite index added 4.75, to 200.85, just a quarter of a point from its all-time high of 201.13.

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