THE New York stock market staged a powerful late rally yesterday led by tobacco and high technology shares, propelling the Dow Jones industrials to a new record high.
The Dow index gained 143.29 points (2.03 per cent) to close at 7,214.49, easily beating its high of 7,085.16 set March 11th.
Some 553 million shares were traded on the New York Stock Exchange, with winners outpacing losers three to one: 1,958 up, 677 down and 683 unchanged.
The bond market however was stable as the yield on 30 year Treasury bond edged down to 6.87 percent from 6.88 percent Friday.
Mr Larry Rice, chief market strategist at Josephthal Lyon Ross, said the rally was partly inspired by enthusiasm over Friday's budget accord, in particular the prospect of a cut in capital gains tax. He said recent gains "have no relation to fundamentals".
"The institutional panic continues," he said, noting that rises were broadbased as smaller capitalised stocks caught up with blue chips following last week's strength.
Another analyst, Ms Elaine Garzarelli, who predicted the 1987 market crash, said the Dow should rise to 7,600 on strong corporate earnings. She predicted growth of 2 per cent in the profits of the Standard and Poor's 500 companies hut that the Dow cold even reach 7,800 or more if the forecast is too low.
Small stocks, she said, "will fare better than blue chips, hut even blue chips will do well thanks to Japanese and European money coming into US market, thanks to the (strong) dollar". The buying spree extended last week's rally in which the Dow gained 322 points. A late afternoon rebound in Dow component Philip Morris, on news a Florida jury found R.J.R. Nabisco unit R.J. Reynolds not negligent in a tobacco suit, helped push the index into record territory.
The tobacco sector suffered earlier from a report that the US Justice Department will intensify its criminal probe of whether tobacco companies systematically lied to Congress about the health risks of nicotine.
