Dow Zips 22 to a New Record Close : Market Overview

The Dow Jones industrial average rose to an all-time high, aided by computer-driven buy programs. But the broader market languished, hurt by a persistent selloff in consumer stocks.

The Dow closed up 22.69 points at 3,478.61, just surpassing the old mark of 3,478.34 set March 10.

* Bond market yields inched up from record lows in choppy but thin trading, failing to muster the momentum to break through the key psychological level of 6.70% on the 30-year Treasury bond.

* The dollar plunged to a record low against the Japanese yen as talks between President Clinton and Japanese Prime Minister Miyazawa ended without any resolution of trade tensions.

Stocks

While the Dow industrials made a new high, some analysts said it was suspect.

The Dow’s buoyancy was based “purely (on) programs” tied to the expiration of April futures and options contracts, said Jon Groveman, president of the Ladenburg, Thalmann brokerage in New York.

Still, both the Dow transportation and Dow utilities indexes reached new records as well. And winners topped losers 966 to 873 on the Big Board, where volume rose to a heavy 305 million shares.

What continues to trouble many pros is the breakdown of the major consumer stocks of the ‘80s, even as the Dow hits new highs.

“It’s been a split market,” said Alan Ackerman, analyst at Reich & Co. While consumer-brand stocks are plunging on fears of slower spending, investors are pouring into energy, transport and industrial stocks that appear to have decent profit prospects even in a moderate-growth economy.

At the same time, smaller stocks that had led the market in 1992 continue to fade. The NASDAQ composite index lost 3.54 points to 666.78 Friday, and now is 6% below its all-time high.

For the week, the Dow gained 82.13 points. Given the momentum of the industrial stocks, 3,500 on the Dow “is a reasonable near-term target,” Ackerman said.

Among the market highlights:

* Industrial names powering the Dow included Allied-Signal, up 1 5/8 to 70 1/4; Dupont, up 2 to 53 3/8; 3M Co., up 2 1/8 to 116; and International Paper, up 3/4 to 65.

* A host of other industrial issues also advanced. Rockwell zoomed 2 1/2 to 34 7/8, Briggs & Stratton jumped 1 1/4 to 68 3/8, Cincinnati Milacron gained 7/8 to 24 7/8, Trinova added 3/4 to 25 5/8 and Air Products & Chemicals leaped 1 5/8 to 44 1/2.

* Among transportation issues, Burlington Northern gained 2 to 58 1/4, Union Pacific added 1 to 65 1/4 and XTRA jumped 3 to 99.

* Energy-related stocks also were leaders, as investors continued to bet on higher oil and gas prices. Among oilfield-services firms, Baker Hughes soared 2 1/2 to 28, Schlumberger rocketed 2 3/8 to 66 and Halliburton zoomed 1 5/8 to 38 3/8.

* On the downside, Gillette became the latest consumer-brand stock to plummet. It tumbled 4 7/8 to 49 1/8 on concerns about continued weakness in its European markets. Bear Stearns and PaineWebber cut their ratings on the stock. Falling in sympathy were Colgate-Palmolive, down 3 1/8 to 59, and Procter & Gamble, off 1/2 to 48 5/8.

* Worries about the pricing power of branded product-makers in a slow economy also socked PepsiCo, which fell 1 7/8 to 36 7/8, and Coca-Cola, which dropped 1 5/8 to 38.

* Retailers, which began to decline sharply on Wednesday when premier discounter Wal-Mart warned of slowing sales, were broadly lower again. Wal-Mart lost 1 to 26 5/8, Dayton-Hudson slid 2 1/8 to 73 7/8, Penney sank 2 3/8 to 82 1/4, Home Depot dropped 1 7/8 to 41 and Nordstrom eased 1/2 to 28 1/2.

* On the NASDAQ market, the big losers were riverboat gambling stocks. Concerns are rising about too much competition on the Mississippi. Also, legislation to allow such gambling on Missouri’s shores appeared to hit a snag.

Falling sharply were Presidential Riverboat, down 3 5/8 to 59 5/8; Casino Magic, off 3 to 43 3/4; and Promus, down 1 1/8 to 36 7/8.

Overseas, London’s FTSE-100 stock index lost 15.3 points to 2,824.4. In Frankfurt, the DAX index added 3.64 points to 1,678.85.

In Tokyo, the Nikkei average lost 377.98 points to close at 20,297.86.

Other Markets

U.S. bond yields hit new lows in overseas trading, but in domestic trading players saw an opportunity to cash in on recent gains.

The Treasury’s key 30-year bond yield jumped to 6.75% from the modern-day low of 6.71% reached on Thursday.

“The market is not ready yet to blast through these levels to a lower yield,” said Kevin Logan, economist at Swiss Bank Corp.

In currency markets, bullish yen sentiment was reinforced by news that the U.S.-Japan trade gap swelled to $4.13 billion in February from $3.90 billion in January. This accounted for 73% of the overall U.S. trade deficit.

“The market feels the yen is going to have to strengthen so trade threats from the United States and Europe can be muted a bit,” said David Glowacki, senior dealer at NBD Bank.

The dollar plummeted to 112.05 yen before closing at 112.30 in New York, versus Thursday’s 113.10.

Near-term gold prices rose $1.80 on New York’s Comex, settling at $339 an ounce.

Most energy prices posted modest declines. Light, sweet crude oil for May settled at $20.14 a barrel, down 8 cents on the New York Merc.