Dow Surges to Another Milestone in Record Time

Dow 10,000 five weeks ago became Dow 11,000 on Monday, as Wall Street’s long bull market continues to trample its doubters.

The blue-chip Dow Jones industrials soared 225.65 points, or 2.1%, to a record 11,014.69 in a flurry of buying focused once again on big-name stocks.

The broader market, however, also was higher, and some experts described the latest advance as gaining strength rather than appearing to be in danger of topping.

Two more reports suggesting an ebullient U.S. economy helped power demand for stocks.

The National Assn. of Purchasing Management’s index of manufacturing activity declined 1.5 percentage points, to 52.8%, in April. That indicated that the manufacturing sector is still expanding but at a slower rate than before--quelling concerns about higher interest rates.

And the Commerce Department reported that Americans’ personal income rose 0.4% in March, with spending keeping the same pace.

Growing optimism about the U.S. and global economies has helped raise investors’ appetites for a wider range of stocks in recent weeks.

On Monday, winners topped losers by more than 2 to 1 on the New York Stock Exchange and by 21 to 19 on Nasdaq.

The NYSE composite index rose 1.6%. Profit-taking in key Internet stocks, however, helped push the Nasdaq composite index down 0.3% to 2,535.58.

Ralph Acampora, director of technical research at Prudential Securities in New York, said the market is much stronger now than it was five weeks ago.

When the Dow passed 10,000, investors were excited but also wary because the advance was built largely on a relative handful of stocks in the technology, telecommunications and drug sectors.

In the past five weeks, the market’s roster of leaders has broadened to include many manufacturing and basic-materials companies that had been out of favor for years.

The emphasis on heavy-industry stocks has helped the Dow, in particular. It is up 20% year to date, double the gain of the broader Standard & Poor’s 500 index.

Dow stocks surging Monday included Boeing, up $2.38 to $43; GM, up $4.69 to $93.75; and 3M, up $4.88 to $93.88. All three could see higher earnings if the global economy is indeed picking up the pace.

Even by the compressed standards of the modern market--a 1,000-point move isn’t what it used to be, percentage-wise--the latest Dow milestone arrived with remarkable speed.

The previous record for a 1,000-point gain was the Dow’s advance from 6,000 to 7,000, a 16.7% rise that took 89 trading days ending in February 1997.

The rise from 10,000, a 10% gain, took just 24 trading days.

It helped the stock market on Monday that Treasury bond yields, which have been rising in recent weeks on worries about the economy’s strength, were mostly unchanged.

“As long as interest rates don’t spike up, I think we’re OK,” said Scott Vergin, a money manager with Lutheran Brotherhood Inc., an insurance company that oversees $6.5 billion.

Contrary to Vergin, billionaire investor Warren Buffett warned Monday that he sees “very, very few” good companies with share prices worth paying.

“It’s not a great time to have cash to invest,” the Berkshire Hathaway chairman, who is holding $15 billion, said before his company’s annual meeting in Omaha.

But analysts say that, for better or worse, many investors today aren’t focusing on whether stocks are good values by historical yardsticks such as price-to-earnings ratios.

Rather, the market is increasingly a story of momentum. When a stock group begins to move up, it can quickly attract a horde of buyers eager to ride the wave.

Some heavy-industry stocks, for example, have moved like Internet stocks in recent weeks. Morgan Stanley’s index of 30 major heavy-industry stocks has gained 21% in a month.

Among Monday’s highlights:

* Retailers were hot, suggesting a bet on continued strong spending. Sears leaped $3.56 to $49.56; Gap jumped $3.94 to $70.50.

* Heavy-industry shares up sharply included lumber firm Weyerhaeuser, up $4 to $71.25; FMC, up $4.75 to $69.75; and Ingersoll-Rand, up $2.06 to $71.25.

* Influenced by tame bond yields, financial stocks recovered from a weak opening to end higher. Dow component J.P. Morgan added $2.63 to $137.38.

* Energy stocks rose again as crude oil futures briefly topped $19 a barrel before closing up 19 cents at $18.85 in New York--the highest closing price since Nov. 26, 1997. Exxon jumped $3 to $86.06; Chevron gained $2.31 to $102.06.

Mexico said Monday it has reduced oil exports as promised in a March meeting with other countries, while Venezuela said it is producing at its approved target.

* Internet and some technology stocks took a drubbing as investors cashed in profits.

America Online slid $9.63 to $133.13 in leading volume on the NYSE. Amazon.com slumped $21.13 to $150.94 and EBay dropped $17.50 to $190.63.

But among major tech names, Intel gained $1.94 to $63.13 and Apple surged $3.56 to $49.56.

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Market Roundup, C12