NEW YORK -- The Dow industrials rose yesterday to a new, all-time record close of 3,101.52, up 18.56 points, as the stock market's impressive December rally continued, albeit accompanied by moderate trading volume.
Institutional and individual investors, as well as professional position traders, appear to be betting that the Federal Reserve's latest moves, in conjunction with anticipated fiscal-policy boosts from Congress and the White House no later than February, will succeed in accelerating a stalled U.S. economy, analysts said. This, they added, could pave the way for a rapid restoration of corporate profits.
Broader stock indexes, including the Standard & Poor's 500 and the New York Stock Exchange Composite Index, also posted record highs.
Normal profit-taking emerged on several occasions yesterday. But, traders said, the market absorbed it well, considering the Dow's dramatic 219-point advance between Dec. 10's close of 2,863 and Thursday's close at a record 3,082.
The advance in December amounts to an impressive 7.6 percent on the Dow and has been powerfully abetted by the gains of the past four sessions. During that time, the Dow rose 5.8 percent in reaction to a dramatically more accommodative monetary policy launched by the Federal Reserve last Friday.
While many day-traders expected the market to consolidate recent gains amid holiday-week illiquidity yesterday, the market's power once again surprised them.
Advancing issues led declining ones by a 2-1 ratio on the New York Stock Exchange, not as big a ratio as Thursday but still comfortably bullish, analysts said.
The Dow rose as much as 14 points, to 3,096, in early trading as firm overseas markets helped set the tone of the trading day. Any influence on the New York opening from a large loss in Tokyo's Nikkei-225 index was more than countered by a solid gains in Frankfurt's Dax-100 index and in London's FTSE-100 average as New York opened.
Generally buoyant action in key stock index futures served to under pin the cash market for most of the day, compensating for a slightly lower Treasury bond market.
But some observers worried that the market now is skating on thin ice, particularly if consumer confidence and business activity do not show signs of improving in the first quarter of 1992.
Joseph Barthel, a technical analyst at Fahnestock & Co., said that a recent technical study of 100 growth stocks -- focused on such "hot" issues as Amgen, Merck, Novell, Microsoft, Campbell Soup and Wal-Mart -- "reveals that the vast majority of growth stocks are now so extended they appear to be in a 'blowoff' stage." After such action, stocks tend to enter "prolonged sideways price consolidation, or they suffer sharp price corrections," Mr. Barthel said.
Jack Cahn, a technical analyst at Cahn/Vince & Co. in St. Louis, said that after the Dow's 219-point run-up since Dec. 10, there should be "a few days of 'churning' action as December gains are 'digested.' " But the overall, intermediate-term picture still holds risk for the market, he said. The market has not risen for at least two days with a ratio of up-volume to down-volume of 9-to-1, nor has it generated advance-decline ratios on the NYSE of 4-to-1. Both events are excellent indicators of a sustainable market rally, he said.
Among Dow components at the close, Disney rose 2 3/4 , to 113 1/4 ; Procter & Gamble gained 1 1/8 , to 90 3/8 ; Merck added 1 1/4 , to 165 3/8 ; Alcoa rallied 1 3/8 , to 65 3/8 ; Goodyear moved up 1 1/2 , to 50 1/4 ; and IBM tacked on 1 1/8 , to 89 3/8 .