Dow flirts with 10,000

Index advances 124.60 to 9,897 close after soaring higher early

Average up 7.8% this year

Oil stocks gain, American Express rises to lead market rally

March 12, 1999|By Bill Atkinson | Bill Atkinson,SUN STAFF

The Dow Jones industrial average streaked to within 65 points of the 10,000-point mark yesterday, in a rally fueled by oil stocks, American Express Co. and Coca-Cola Co., then fell back a bit to close at 9,897.44.

Over the day, the index of 30 big company stocks rose 124.60 points, or 1.27 percent.

The Dow index has climbed 716.01 points since the year began and is up 7.8 percent.

"It is breathtaking, particularly after four years of 20-plus percent gains," said Judith Jones, senior managing director at Cleveland-based Key Asset Management Inc., and co-manager of the Victory Value Fund.

Rob Brown, chief market strategist at Ferris, Baker Watts Inc. in Baltimore, said the market has "lived a charmed life. It seems almost predestined the way this market acts. Every time there is a threat, the threat fades away. The momentum is on the side of the bulls."

Three weeks ago, the threat was higher interest rates, and the stock market sagged because investors were worried that the strong economy would force the Federal Reserve Board to raise them.

But those fears subsided last week, and "it was off to the races," said Angel Mata Jr., head of listed equity trading at Baltimore-based Legg Mason Wood Walker Inc.

Mata said that, during the market lull, investors held onto their money, but now they are convinced it is heading higher, so they are buying stocks.

"Investors are saying to themselves, `If i don't get involved, I am going to miss the boat,' " Mata said.

In addition to the Dow, the Standard & Poor's 500 stock index, rose 10.84 points, to a record 1,297.68, after briefly passing 1,300 points for the first time.

The Nasdaq composite index rose 6.25 points, to 2,412.25. More than 1 billion shares changed hands on the Nasdaq market yesterday.

Elsewhere on the broad market, the Wilshire 5,000 index jumped 80.94, to a record 11,798.01; the

American Stock Exchange composite index advanced 6.51, to 721.65; and the S&P 400 midcap index added 1.07, to 366.57. The Russell 2,000 index, a benchmark of small-cap stocks, slipped 0.04, to 401.08.

The Sun-Bloomberg Maryland index of the top 100 Maryland stocks gained 1.89, to 244.60.

New York Stock Exchange trading was heavy, at 909.6 million shares, the most since Jan. 13. Eight stocks rose for every seven that fell on the Big Board.

The Dow's climb started shortly before 10: 30 a.m, when it raced to 9,935.46, nearly nipping 10,000 in just over two hours of trading. It quickly faded, then rallied again until the close.

Some analysts expect the Dow to keep rising. Ralph Acampora, the closely followed strategist from Prudential Securities Inc., predicts that the Dow will hit 11,500 in the third quarter.

Richard McCabe, chief market analyst at New York-based Merrill Lynch & Co, isn't as optimistic. He expects the Dow to pass 10,000 anytime within the next week or two.

"It might be tomorrow or it might be Monday," he said.

But then the Dow will pull back, falling as much as 15 percent to 20 percent this spring, McCabe said. After the decline, the stock market should strengthen and rise higher in 2000 and 2001, he said.

The problem many experts have with the stock market is that too few stocks are rising, and the gains are concentrated in the biggest and most popular companies.

McCabe said the average price of a stock traded on the New York Stock Exchange fell 4 percent last year and four companies declined in value for every three that rose.

"Beneath the surface of these averages, the advancers are very narrow," he said. "Most of the stocks haven't made new highs since at least 1998, and in many cases the summer to fall of 1997."

Experts aren't sure if reaching 10,000 points will mean anything for the stock market.

"You are just moving out into the wild blue yonder," McCabe said.

Added Brown, "In terms of 10,000, fundamentally, it means nothing," he said. "In terms of psychology, perhaps it could be significant."

Yesterday, the usual suspects -- Microsoft Corp., Dell Computer Corp. and online bookseller Amazon.com -- didn't lead the charge upward. Oil stocks, which have been ignored by many investors, jumped for a second day as officials from some of the world's top oil producers met in Amsterdam, the Netherlands, to revive attempts to cut production.

Chevron Corp., whose 2.6 percent gain in 1999 has lagged behind the S&P 500's 5.6 percent increase, gained $1.8125, to $85.0625. Exxon Corp., the biggest U.S. oil company, rose $1.625, to $74.9375.

American Express Co. gained $5.875, to $123.50, contributing the most to the Dow average's gain, after settling a trademark lawsuit filed by Discover Financial Services.

Coca-Cola Co. was the No. 2 gainer in the Dow, rising $3.4375, to $66.3125, after an analyst raised his rating on the world's largest beverage company to "buy" from "market perform."

Amgen Inc. rallied $4.125, to $74.625. The world's largest biotechnology company said it acquired rights to a prostate cancer drug in the final stages of clinical trials from closely held Praecis Pharmaceuticals Inc.

Dell dropped $1.4375, to $41.875, and was the most active stock in U.S. trading, with 42.8 million shares changing hands.

In a further sign of slowing demand in the personal computer industry, Ingram Micro Inc., the world's largest PC distributor, projected first-quarter earnings below analysts' estimates and said it's cutting 1,400 jobs in response to slowing sales. Still, Ingram closed $1.125 higher at $19.75.

Brightpoint Inc. tumbled $7.0625, to $6. The U.S. wireless phone distributor warned that it won't meet analysts' expectations for first-quarter revenue and forecast zero earnings per share vs. the 22 cents per share analysts had expected.

Bloomberg News contributed to this article.

Pub Date: 3/12/99

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