Stocks reach record highs as the Dow breaks 4,900 Drug companies among the biggest gainers


NEW YORK -- U.S. stocks soared to record highs yesterday as optimism spread that makers of consumer goods -- such as household products and drugs -- will post steadily increasing profits in coming quarters.

The Dow Jones industrial average surged 50.94 to 4,922.75, breaking through the 4,900 mark for the first time. The latest rally came just nine months after the average first crossed 4,000.

Procter & Gamble Co., Philip Morris Cos., Colgate-Palmolive Co., Eli Lilly & Co. and Walt Disney Cos. were among the stocks leading the advance.

Four rounds of computer-guided buy orders helped the Dow industrials add 33.6 points, according to Birinyi Associates Inc. Traders said some of the buying may have been related to Friday's so-called "double witching," when options on stock indexes and individual stocks expire.

Shares of Procter & Gamble, which makes everything from toothpaste to laundry detergent, jumped $3.50, to $86.875. Philip Morris's stock reached an all-time high of $89.625, up $1.75.

The Standard & Poor's 500 index, which measures the broader market, rose 4.67, to 593.96, its 67th record this year. Drug, heath-care and household product companies were the biggest gainers, offsetting losses in medical products and semiconductor issues.

The Nasdaq composite index managed a gain of 1.23, to 1,041.85, after plunging 17.84 Tuesday. Losses in Amgen Inc., Novell Inc. and Intel Corp. stunted the advance.

The Russell 2000 index lagged the rally, slipping 0.06, to 301.46. The American Stock Exchange market value index slid 1.39, to 527.22. And the Wilshire 5000 index rose 29.04, to 5847.40.

The breadth of the rally was narrow. Some 1,194 shares rose and 1,060 fell on the New York Stock Exchange.

About 376 million shares changed hands yesterday, compared with 354 million Tuesday and above 346 million daily average over the past six months.

The stock rally came after the Federal Reserve's policy committee left interest rates unchanged at its meeting yesterday. Expectations that the economy would grow at a slow pace prompted the exodus to consumer product companies, money managers said.

The Morgan Stanley consumer index rose 2.52, or 0.9 percent, to 276.14 as P&G, Johnson & Johnson and American Home Products Corp. rallied. The firm's index of so-called cyclical stocks fell 0.61, or 0.2 percent, to 332.74.

Drug companies were among the biggest gainers, because demand for medicine typically remains steady even when economic growth eases. Eli Lilly & Co.'s stock gained $2.50 to a 52-week high of $99.50; Pfizer Inc.'s stock rose $1.875, to $60.875; and Pharmacia & Upjohn Inc. shares gained $1.375, to reach $35.50.

Among other consumer product companies that soared, Johnson & Johnson shares climbed $2.75, to $85.875; American Home Products rose $1.125, to $90.125; and Zeneca Group PLC added $2.25, to reach $60.75.

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