Dow cracks 2000 level

Press, 10 January 1987, Page 28

Dow cracks 2000 level

NZPA-AP New York The Dow Jones industrial average cracked the 2,000 level for the first time on Thursday (NZ time) as the stock market extended its early-1987 rally through a fifth straight session. Analysts noted that the market had enjoyed an unusually strong advance so far this month, with many smaller secondary stocks rising even more sharply than the blue chips in the Dow Jones average. The upsurge has been widely interpreted as a Sign of new life in the bull market that began nearly 414 years ago. The 2000 level in the Dow, while it stands as an historic milestone, is not generally regarded as significant from the points of view of either fundamental or technical analysts. Nevertheless, Thursday’s closing number served to emphasise the progress the market has made in recent years. It came only about 13 months after the average first reached 1500, in December, 1985. The Dow Jones average

of 30 industrials rose 8.30 to close at 2,002.25, bringing its gain since New Year’s Day to 106.30 points. Advancing issues outnumbered declines by more than 2 to 1 on the New York Stock Exchange, with 1159 up, 499 down and 351 unchanged. Volume totalled 194.52 million shares, against 190.87 million in the previous session. The NYSE’s composite index climbed 1.12 to 147.55. A resounding cheer roared across the stock exchange trading floor as the 2000 mark was reached. After resting on the 2000 mark for a few nervous minutes, the average stumbled 10 points in a matter of moments and then later regained ground to rise above 2000 again. The ups and downs of the index have been closely identified with the progress of the American economy. The Great Depression of the 1930 s was heralded by a series of sharp drops in the average in late 1929. The most recent spurt of 100 points in the index came as a surprise against the backdrop of a record

merchandise trade deficit for November, reported on the last day of 1986, and other sluggish economic indicators. The market’s difficulty when it neared 2000 on Wednesday and again Thursday, illustrated the technical phenomenon known as chart resistance. At key “round numbers,” some traders sell stocks in anticipation that the euphoria of the rise will quickly evaporate into a sell-off. But strong penetration of such a psychological barrier can give the market a big lift. And in London on Thursday share prices on the London Stock Exchange also scaled new highs as investors, encouraged by Wall Street’s record climb, added more than £4 billion ($NZ11.24 billion) to the value of company stocks. Strong buying interest and a shortage of stock combined to push the broadly-based Financial Times-Stock Exchange 100 index to a new record for the second day running. It gained 23.1 points to 1745.3 before edging back to 1742.8. The rise followed this week’s general boom in world stock markets, particularly on Wall Street.