Investors went hunting for stocks Monday that will do well as the economy continues to grow, driving the Dow Jones industrial average to a record-high close.
The blue-chip rally got a lift from a survey by the National Association of Purchasing Management, which reported manufacturing activity rose in October to the highest level since February. The report was the latest in a slew of economic figures showing the economy beginning to percolate.
The Dow industrials advanced 12.02 points to 3692.61, breaking the high of 3687.86 set Thursday. The Nasdaq index rose 4.51 points to 783.77, below its Oct. 15 high of 787.42.
IBM, which went from being Big Blue to black and blue as the mainframe computer business gave ground to personal computers, made the most-active list on the New York Stock Exchange with a gain of $1.75, to $47.75, its highest close since July. A division of the company announced it was offering its first-ever chipset for advanced personal computers.
Dean Foods of Franklin Park rose $1.50, to $27.12, after reporting it will buy the popular Birds Eye frozen-vegetable business from Kraft General Foods, a division of Philip Morris. Philip Morris, which is seen as benefiting from an improving economy, as well as making cash on this deal, rose 50 cents, to $54.25.
Good news for the fish
International Paper rose $2.25, to $61.75, after an analyst at S.G. Warburg upgraded the company to a “buy” from a “hold.” International Paper’s stock fell $2.50 Friday on reports the Environmental Protection Agency was prepared to announce anti-pollution rules for the paper and pulp industry, including eliminating chlorine from the bleaching process. EPA did make such an announcement Monday. The paper industry said the change will cost the industry $10 billion and will result in the closing of 30 mills and a loss of 19,000 jobs. EPA officials estimated the cost at $4 billion and said fewer than 13 mills will have to close-a loss of up to 10,700 jobs.
International Paper already has started to use other chemicals in the bleaching process.
Too much good news sent bond prices lower and bond yields higher. The benchmark 30-year Treasury bond yield rose to 6.03 percent from Friday’s 5.96. It was the highest level in about a month.
As economic activity accelerates, it eventually feeds inflation, sending interest rates higher. Bond traders said, however, they don’t expect yields to rise much above 6 percent under current economic conditions.
Heartland report
The rally sent many Midwestern stocks to 52-week highs.
Chicago-based Morton International rose $1.87 to a new high of $96.87 on a report the company will sell dual air bags-passenger- and driver-side-to Volkswagen for its automobiles directed to the European market, beginning in the 1996 model year.
Morton’s air-bag business has been expected to grow in step with increasing concern for passenger safety among European auto buyers. Morton currently sells air bags to Volkswagen for some U.S. models, including the new Golf III and Jetta III cars made in Puebla, Mexico.
UAL, parent of United Airlines, rose $2, to a new high of $154, on continuing strength from an earnings report last week showing year-to-year growth in revenues of more than 11 percent.
Among the options
The Chicago Board Options Exchange said it will begin Friday trading options on interest rates, based on the yield to maturity of the most recent issue of 5- and 10-year Treasury notes and the 30-year Treasury bond.
Finally, a low note
While others hit highs, Elgin-based Safety-Kleen, the waste-disposal firm, descended to a 52-week low, losing 37 cents, to $13.37. Safety-Kleen has had earnings trimmed, has been placed on a Standard & Poor’s credit watch and has seen expensive building projects go … well, go to waste.
