From CNNfn, explanation for the rise :
Dow bolts to record level
Blue chips up sharply at midday; broader
market follow bond recovery
June 6, 1997: 12:32 p.m. ET
NEW YORK (CNNfn) -- Blue-chip stocks surged
into record territory at midday Friday, while bond
traders decided to accentuate the positive in the
latest U.S. employment figures.
The Dow Jones industrial average rose 103.87
points to 7,409.16 shortly after noon, challenging the
all-time closing high of 7,383.41 set on May 27. The
blue-chip measure was powered by components
Procter & Gamble (PG), up 2-1/2 to 135-3/4,
Merck (MRK), up 2-1/4 to 91-1/2, Travelers
(TRV), up 1-5/8 to 57-3/4, and American Express
(AXP), up 1-1/2 to 70-7/8.
Stocks and bonds initially offered an
unenthusiastic reaction to the Labor Department's
report that the U.S. jobless rate fell to 4.8 percent in
May -- the lowest level in 23 years. Bonds fell
sharply and stock indexes appeared trapped in a
narrow range as traders worried that the numbers
portend inflation and a possible interest-rate hike by
the Federal Reserve.
But sentiments changed by midday. Traders
chose to focus another element of the report: the fact
that the economy added just 138,000 non-farm
payroll jobs last month -- far below the 233,000
jobs forecast by economists. Perhaps not good news
for Main Street, but enough evidence of a
moderating economy to renew bring money back
into stocks and revive foundering bond market.
"The jobs report is much like the previous ones
this year," said Douglas Cliggott, U.S. equity
strategist at J.P. Morgan. "There's something in it for
everyone."
The price of the 30-year Treasury bond reversed
an early decline and rose 19/32 in price and the
yield, which moves in the opposite direction, fell to
6.83 percent. That eased pressure on the broader
stock markets, where the S&P 500 index climbed
10.85 to a record level at 854.28, the Nasdaq
Composite gained 6.08 to 1,396.13 and the
American Stock Exchange index rose 2.26 to
613.01.
On the New York Stock Exchange, advances led
declines, 1,383 to 811, as more than 219 million
shares changed hands. |
