Party Hats Fly, but Dow Still Falls Short of 10K

NEW YORK — In a nail-biter of a finish on Wall Street, the Dow Jones industrial average on Thursday crossed the 10,000 milestone for the second time this week, only to fall a nose short at the closing bell.

With New York Stock Exchange Chairman Richard Grasso and other dignitaries cheering from the Big Board balcony like fans at a racetrack, the index closed at a record 9,997.62, up 118.21 points, or 1.2%.

Several times in the final 10 minutes of trading the index flickered above 10,000 before barely easing back.

Grasso and Peter Kann, chairman of Dow Jones & Co., began throwing baseball caps emblazoned with “Dow 10,000” to the trading floor below as the Dow crossed that historic mark. They quickly stopped.

Yet some analysts predicted that Thursday’s action set the stage for a close above the milestone today--finally.

“I think the hesitation we’ve seen is actually encouraging,” said analyst Eugene Peroni of Janney Montgomery Scott in Philadelphia. Selling near the 10,000 mark “helps to police any excess enthusiasm, so that we’ll get a more sustainable rally when we finally break through.”

Unlike on Tuesday, when the Dow peaked at 10,001.78 in the first half-hour of trading and then slid back 100 points, Thursday’s last-minute retreat from the high of 10,001.51 was grudging and came in context of a strong advance in other indexes.

The Nasdaq composite climbed 33.99 points, or 1.4%, to close at 2,462.96, with Microsoft leading the way, up $5.31 to $172.44--nearing a record high.

The Standard & Poor’s 500 rose 18.73 points, also 1.4%, to a record 1,316.55.

Gaining stocks outnumbered losers by 15 to 13 on the NYSE, and volume was a fairly brisk 831 million shares.

The market had solid underpinnings on Thursday, as the government’s report on consumer price inflation in February showed a mere 0.1% rise. Despite robust growth, the economy thus appears to be generating no inflationary pressures that would cause the Federal Reserve to raise interest rates any time soon.

In the Treasury bond market, where trading has been extraordinarily dull lately, yields eased slightly. The 30-year T-bond yield dipped to 5.49% from 5.5% on Wednesday.

Meanwhile, several stock sectors advanced Thursday amid indications that corporate earnings may show surprising strength in the first quarter, thanks to the economy’s health.

Those sectors included paper stocks, airlines and banks.

Several traders noted that computerized “sell” programs had kicked in when the Dow hit 10,000 on Tuesday morning, knocking the index back.

If there was computerized selling at 10,000 on Thursday, they said, it failed to have anywhere near as much impact.

“The market kind of hung in there,” said technical analyst Robert F. Dickey of Dain Rauscher Wessels in Minneapolis. “There was no panic selling at all--just a very normal pullback.”

Dow 10,000 is a little like the year 2000 computer problem in that it has gotten a lot of media attention and has spooked some investors, Dickey said. When--and if--the market pushes past 10,000, the psychology may work the other way, he said.

“People will breathe a sigh of relief and you could see some real excitement in the market,” he said.

Many market watchers dismiss the Dow milestone as arbitrary and insignificant, but there was no disputing that it created drama Thursday afternoon.

Several traders admitted being glued to their TV sets or computer screens as the Dow pingponged back and forth across 10,000 in the last moments of trading.

A technical factor makes today an auspicious one for the push to close above 10,000. It happens to be a “triple witching day,” when options and futures contracts pegged to market indexes, as well as individual stock options, all expire.

The simultaneous expirations, which occur once each quarter, often trigger heavy trading. But there’s no pattern to the market’s performance on those days.

Among Thursday’s highlights:

* Only seven Dow stocks posted losses, whereas 23 gained, paced by financial stocks. American Express jumped $6.75, to $127.63; J.P. Morgan rose $3.69 to $124.19; and Citigroup was up $1.94 to $64.69.

Bloomberg News reported that analyst Bradley Ball at Credit Suisse First Boston raised his first-quarter earnings estimate for Citigroup to 90 cents a share from 70 cents and for J.P. Morgan to $1.90 from $1.40.

Other bank stocks rising included BankAmerica, up $3.25 to $73.94; First Union, up $3.19 to $5.25; Wells Fargo, up $2.50 to $38.75; and Mellon, up $2.31 to $73.31.

* Many heavy-industry stocks were strong as Georgia-Pacific projected first-quarter earnings well above expectations, crediting the economy. G-P rose $1.63 to $79.50, International Paper jumped $1.13 to $45.56, Alcoa gained $1.38 to $40.63 and Dupont leaped $1.38 to $56.81.

* Airlines continued to rocket on enthusiasm about the companies’ near-term earnings. UAL, parent of United, soared $3.19 to $77.19; Northwest rose $1.38 to $28.19 and Alaska Air gained $1.75 to $53.06.

* The Internet sector continued to surge, with Ubid up $5.06 to $73.31, Egghead.com up $4.94 to $21.88 and Network Solutions up $6.19 to $284.44.

Also, America Online shot up $7.06 to a record $116.13. Goldman Sachs raised its fiscal 1999 earnings estimate for AOL to 35 cents a share from 30 cents, and the 2000 estimate to 55 cents from 44 cents.

* Among Southland issues, Countrywide Credit Industries, the biggest independent mortgage lender in the U.S., rose $1.25 to $39.25 after Chairman Angelo Mozilo said the stock should be trading at almost double the current price.

“The stock is horribly undervalued,” Mozilo told the Bloomberg Forum. That’s true “by any measure, whether it be the earnings to the price of the stock, or in terms of the overall value of the franchise itself, where we stand in the industry, valuing the parts versus the whole, wherever you come at it.”

* Another Southland-based firm, Gemstar International, surged $5.81 to $62.94. The company said telecom giant US West will offer Gemstar’s electronic TV programming guides with US West’s digital set-top boxes.

The companies didn’t disclose the value of the deal.

Wall Street’s strong day came despite selling in Asia and Europe. Japan’s Nikkei 225 index dropped 3.4%, with investors taking profits from a market that was up 20% year-to-date. Hong Kong’s key index slid 2.6%.

But by midday today both markets were rebounding again.

In Latin America, Brazil’s main share index rose 2.4% to 10,894 Thursday as Brazil’s congress approved a financial transaction tax, the last item in a huge package of spending cuts and tax increases to narrow the country’s budget gap.

Market Roundup, C6

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

(National Edition) Will Witches Smile?

Today is a “triple-witching” day, the quarterly expiration of key stock index futures, index options and individual stock options contracts. Witching days can be volatile as traders close out bets they’ve made, either buying or selling stocks to offset expiring contracts. But witching days show no particular pattern in terms of market moves, as the changes in the Dow Jones industrial average on the last eight witching days show:

1997

Witching day: Close and change in Dow Jones industrials

March 21: 6,804.79, -15.49

June 20: 7,796.51, +19.45

Sept. 19: 7,917.27, -5.45

Dec. 19: 7,756.29, -90.21

*

1998

Witching day: Close and change in Dow Jones industrials

March 20: 8,906.43, +103.38

June 19: 8,712.87, -100.14

Sept. 18: 7,895.66, +21.89

Dec. 18: 8,903.63, +27.81

Source: Times research