Blue-chip stocks hit new highs for the 10th time this month on Wednesday, in an advance that is almost becoming monotonous--except that so much money is involved.
The Dow Jones industrials streaked to another record, gaining 32.42 points to 6,430.02, quickly dispatching the 6,400 mark.
Since Nov. 1 the index has jumped 6.8%, and now is up 25.7% so far this year.
The broad market, meanwhile, continued to lag the blue-chip Dow's advance. Most major stock indexes posted gains much smaller than the Dow's on Wednesday. Even the Standard & Poor's 500 index, also dominated by blue-chip issues, rose just 0.24% versus the Dow's 0.51% rise.
Among small-stock indexes, the Russell 2,000 inched up a mere 0.58 point, or 0.17%, to 347.53.
Rising stocks beat losers by 14 to 11 on the NYSE, but losers slightly edged winners on the Nasdaq market of mostly smaller stocks.
"We continue to see money pour into the big companies, which means people want to be in but want to own stocks that are easy to sell if the market turns," said Tucker Anderson, money manager at Cumberland Asset Management.
"This is a very narrow advance of only the biggest companies. At some point the small companies have to catch up, or the big ones will retreat," he said.
Other analysts, however, say stocks' rally is rooted in powerful fundamentals. "The main drivers of the bull market remain intact: [The economy] will not accelerate, inflation and interest rates will remain stable, and corporate earnings growth will continue to surprise on the upside," said Kevin Parke, head of research at MFS Asset Management, with $50 billion in assets.
A modest bond rally helped keep stock buyers in a good mood Wednesday. The yield on the bellwether 30-year Treasury bond slipped to a fresh eight-month low of 6.41% from 6.43% on Tuesday.
Traders said healthy demand for the five-year notes auctioned by the Treasury on Wednesday--at an average yield of 5.95%--helped to buoy bonds.
On Wall Street, the Dow's hero stocks on Wednesday were new faces. IBM, which had led the index higher in recent days, took a breather, off 1 1/2 to 152 5/8 after soaring to 159 during trading.
The big gainers in the Dow were true industrials: GM, up 2 1/2 to 57 1/8; Alcoa, up 1 3/4 to 63 1/2; and Caterpillar, which shot up 4 3/4 to 78 3/4 after brokerage Smith Barney raised its rating on the stock to "buy" from "neutral."
"There's no question it's frothy, but this is sustainable as long as bond yields stay to the market's advantage," argued Joseph Battipaglia, analyst at Gruntal & Co.
Among Wednesday's highlights:
* Tech stocks were mixed after an early rally, with many tracking IBM's surge, then slide. IBM was hurt late in the session by speculation that Soundview Financial Group, an influential research firm, was lowering its investment opinion on the computer industry. Soundview said it hadn't changed its rating.
Microsoft eased 2 5/8 to 153 1/4, Dell Computer lost 1 3/4 to 96 and Cybercash fell 1 1/4 to 27 3/4.
But Computer Associates jumped 3 7/8 to 63 7/8, Oracle gained 1 3/4 to 47 7/8 and Sun Microsystems surged 2 1/4 to 59 1/4. Analysts said upbeat projections at the giant Comdex computer industry show in Las Vegas this week--where computer industry leaders are gathered--is boosting many of the stocks.
* Defense stocks were broadly higher. Boeing climbed 2 3/8 to 96 3/8 on reports that American Airlines' parent AMR was set to place a multibillion-dollar aircraft order.
Also, GM Hughes Electronics gained 3 7/8 to 53 5/8 and Raytheon jumped 2 1/2 to 52 3/8 on rumors that the two firms may merge. Both declined comment.
* Many bank stocks advanced again, as bond yields fell. NationsBank rose 1 1/4 to 100 1/4, Wells Fargo added 1 5/8 to 283 7/8 and Zions Bancorp shot up 3 3/4 to 94.
* Revlon tumbled 3 1/2 to 30 1/8 after Smith Barney trimmed 1997 earnings estimates. Elsewhere, Donna Karan jumped 1 1/2 to 16 1/8. The fashion house named Morgan Stanley executive Dewey Shay chief administrative officer.
In foreign trading, Hong Kong's stock market hit a record high, as did Toronto's and Sydney's.
In Shanghai, stocks staged their biggest rally in five months on speculation that regulators will take steps to boost stocks.