Dow rises 60 points to another record Investors hoping for interest rate cut


NEW YORK -- After a two-day breather, stock prices resumed their advance with feeling yesterday, with many indexes yet again bounding to new highs.

In heavy trading, the Dow Jones industrial average, which had set eight records in the previous 12 trading days, repeated the feat, rising 60.60 points, or nearly 2 percent, to 3,246.20.

Chief among the factors cited for the rise was the retail sales figure for December, which was disturbing but not unexpected. The reason such bad news appeared to please investors is that it raised hopes of yet another move by the Federal Reserve to lower interest rates, which in the long run would lift corporate earnings.

Low interest rates have driven small investors to the stock market, since it currently offers one of the few investments with an attractive return.

Some leading oil companies provided leadership for the market, giving it an early boost on speculation that the Organization of Petroleum Exporting Countries' meeting next month could bring an agreement to reduce oil production and in turn raise prices.

ARCO jumped 4 1/8 , to 108 3/8 ; Exxon gained 1, to 60 1/4 ; and Mobil rose 1 1/2 , to 66 7/8 .

Traders said American Express added stimulus to the market as it rose on reports that it may be considering selling a big stake in its Lehman Brothers investment bank, but the company said that its policy is not to comment on market speculation or rumors.

American Express rose 1 1/4 to close at 23 1/8 and was among the most active issues.

Yet another factor influencing trading may have come from rumors that the latest survey of consumer confidence by the University of Michigan would show a sharp rise. There were also rumors that consumer confidence would be down -- and others that it would be flat.

Volume on the New York Stock Exchange was 265.9 million, up from 200.4 million shares traded Monday, as gaining issues outnumbered losing ones by a 2-1 ratio.

The Standard & Poor's index of 500 stocks rose 6.10 points, to a new high of 420.44, and the New York Stock Exchange's composite index gained 3.10 points, to a record 231.57.

The American Stock Exchange also was active, and the market's index moved 4.74 points higher, to a closing high of 412.63.

Similarly, trading on the NASDAQ pushed its index to an all-time closing high of 625.75, up 8.12 points, while the Russell 2,000 rose 2.49 points, to 202.35, its highest closing to date.

Yesterday's 60.60-point gain in the Dow was the largest since Dec. 30, when the Dow rose 62.39 points.

Activity was brisk and would have been brisker if it had not been for the Big Board's 50-point rule, which restricts program trading soon as the Dow moves up or down 50 points. By eliminating electronic trading and forcing purchases to take place only on the downtick of a stock price and not on a continuing rise in price, the exchange is able to control the volatility program trading adds to a session.

John H. Shaughnessy, senior vice president and director of research for Advest Inc., said that he could not put his finger on any one factor in yesterday's market rise, but he felt investors appeared to be more upbeat about the economy.

"What you had in today's market were more of the same forces at work that have been accumulating since the monetary easing last month," Mr. Shaughnessy said. "It's money looking for a home."

Gene J. Seagle, director of technical research for Gruntal & Co., said the market seemed to be resisting any correction.

"Each time the market pulls back, there is a rush of investors buying into the market and driving prices up," he said.

Mr. Seagle was referring to both small investors, who have been coming back to the market for lack of better returns elsewhere, and some institutional investors, who did not believe that the market could sustain the rally and now are waiting to get in.

Traders say that while investors have been quick to buy into the market, many are still concerned that the stock market may be placing too high a valuation on future corporate profits.

"It is the professionals who worry about vaulations," Mr. Seagle said. "They were the ones who moved to the sidelines and now are waiting to get in."

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