With inflation low, confidence high, stocks go skyward Dow up 45

records set in broad market

February 04, 1993|By Ian Johnson | Ian Johnson,New York Bureau

NEW YORK -- Buoyed by confidence in the economy and low inflation, investors poured money into stocks yesterday, helping to send the Dow up 45 points, to its strongest showing in six months and its busiest day this year.

The flood of money also helped push up two other important indexes -- the S&P 500 and the NASDAQ Combined Composite Index -- to record highs. Spurred by low interest rates, investors grew more and more confident about stocks, said Philip Smyth of Birinyi Associates.

"There's a lot of cash on the sidelines, and as bond yields decline, that tends to push up the stocks," Mr. Smyth said.

The money, much of it from mutual funds, helped push the Dow Jones industrial average up 45.12 points, to 3,373.79. Advancing stocks on the New York Stock Exchange exceeded declining issues by a 13-to-6 margin. Volume was more than 342 million shares.

The Dow was up 50 points just before the close, but this triggered the stock exchange's "down-tick" rule, which tries to stabilize the market by curbing program trading.

Still, the close was the best result this year and the highest since Aug. 4. The Dow is now only about 39 points off its all-time high of 3,413.21, set June 1, 1992.

Other indexes, which provide a broader picture of the stock market than does the Dow, were also up, several at record highs. The Standard & Poor's composite index of 500 stocks rose 4.64 points, to a new high of 447.20. The NASDAQ index of smaller over-the-counter stocks rose 3.55, to 708.67, also a new high. The NYSE Composite index of all listed common stocks rose 2.47, to a new high of 246.45.

In addition to growing confidence that interest rates will stay low, the market has been spurred by batches of positive economic reports, said Michael Sherman, equity strategy for Shearson Lehman Brothers Inc.

Confidence about the recovery helped push up cyclical stocks, which make up a large portion of the Dow.

General Motors Corp. added $1.75, to $39.125; Caterpillar Inc. rose $1.50, to $58.25; Goodyear Tire & Rubber Co. rose $1.875, to $71; International Paper Co. was up $2.125, to $65.375; and Cummins Engine Co. Inc. gained $4.125, to $80.125.

Drug stocks, which also figure heavily in the Dow, recovered after worries earlier this week that the Clinton administration's plans for free vaccines would reduce earnings.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.