Dow rises to record 3,378.13 Riot-interrupted rally resumes

Dow up 42

May 05, 1992|By Seth Faison Jr. | Seth Faison Jr.,New York Times News Service

NEW YORK -- Stocks surged yesterday, lifting the Dow Jones industrial average to another record as Wall Street welcomed the return of calm in Los Angeles and the return of investors, who fled on Friday, back into the stock market.

The Dow gained 42.04 points, closing at 3,378.13 and surpassing the previous record of 3,366.50 set April 16. It marked the 18th time since Jan. 1 that the Dow had bettered its previous high, a streak of advances that has fed on the seemingly endless procession of hints -- without outright confirmation -- that an economic recovery has begun.

The Dow soared more than 30 points in the opening hour of trading and floated easily in record terrain for the rest of the day, reaching above 3,390 in the early afternoon. Other indexes also advanced strongly, though none broke a record.

"There was a big sigh of relief," said Robert Walberg, analyst at MMS International, referring to the market's reaction to the peace that has descended on Los Angeles, in contrast with the uncertain situation when the market closed Friday afternoon. "Everybody came back in early, and that gave us a nice pop."

Hugh Johnson, chief investment strategist at First Albany Corp., argued that an even greater factor in the market's advance was the realization by many investors, after some faintly positive economic indicators were released late last week, that a feeble recovery might benefit stocks more than anything else.

"Wall Street is about to get the best possible of all worlds," Mr. Johnson said. "And that is a no-boom, no-bust trajectory that lasts."

In a slow, drawn-out recovery, Mr. Johnson said, the Federal Reserve Bank might again choose to lower interest rates, as long as inflation remains low. That would especially benefit growth-oriented stocks, which have fallen in recent weeks while the Dow has continued to climb.

Standard & Poor's 500-stock index rose 4.38 points, to 416.91, only a few points from its high of 420.77, which was set on Jan. 15.

The NASDAQ composite index, a leading indicator of over-the-counter stocks, went up 5.40 points, to 583.54, far below its record high of 644.92, set on Feb. 12.

The American Stock Exchange index was also up, by 1.83 points, to 391.61, some distance from its record high of 418.99, also set Feb. 12.

Robert Freedman, chief investment officer at John Hancock Mutual Funds in Boston, said that the market also reacted positively to rumors that the Federal Reserve Bank would again cut its discount rate.

Mr. Freedman predicted greater gains in the market over the coming weeks. Mr. Walberg and Mr. Johnson were more cautious.

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