New optimism about interest rates sent investors in hot pursuit of consumer and banking stocks Friday and propelled the Dow Jones industrial average to a record high close with the fifth-biggest point gain ever.
The blue-chip indicator bounded up 268.68 points, the most since last Oct. 15, to close at a new peak of 9736.08, a gain of 2.8 percent. That easily surpassed the previous record close of 9643.32 set Jan. 8.
Analysts were encouraged that financial and consumer stocks were leading the market rather than the usual top computer-technology stocks.
After breaking out of its two-month trading range and cracking through the 9700 mark for the first time, the Dow now is up 6 percent for the year.
All 30 Dow industrials posted gains. One of the leaders was Oak Brook-based McDonald’s, which jumped $4.19, to a record closing high $94.31.
Shares of General Electric advanced $3.19, to $103.69, while General Motors rose $2.87, to $88.62. Chase Manhattan climbed $3.50, to a 52-week high of $86.87, and Wal-Mart Stores soared $3.87, to $93.25, establishing its own 52-week high. Other financial stock gainers were American Express, up $5.56, to $118.56, and Citigroup, which added $1.44, to $61.75.
International Business Machines gained $7.37, to $178.37.
Clearly, analysts said, Friday’s stimulus was a benign employment report that disclosed a 0.1 percentage point increase in February’s unemployment rate, little growth in average wages and a decrease in manufacturing jobs.
That set off a big rally in the bond market, as traders interpreted the report as meaning the Federal Reserve will refrain from raising short-term interest rates to slow things down. The 30-year Treasury bond jumped by $13.43 per $1,000 in face value as the yield dropped to 5.60 percent from 5.69 percent late Thursday.
With interest rates falling, the outlook for stocks improved and buyers were pursuing equities from the opening bell.
The rally drew comparisons with the stock market’s recovery from last October’s correction. Combined with Thursday’s rise of 191.52 Dow points, the industrial average posted a two-day gain of 460.20. That eclipsed the previous record two-day gain of 447.98 points, recorded last Oct. 15-16.
For the week, the Dow advanced 429.50, a gain of 4.6 percent.
The Standard & Poor’s 500 index rose 28.83, or 2.3 percent, to 1275.47, just short of the record high 1283.84. The S&P showed a gain of 37.14 for the week, or 3.0 percent.
Computer-technology stocks marched ahead at a more sedate pace. The Nasdaq composite index climbed 44.22, or 1.9 percent, to 2337.11, led by a $4.19 gain in Dell Computer, to $86.06. The gain for the week was 49.08 points, or 2.1 percent.
The Russell 2000 index of small-company stocks rose 3.99, or 1 percent, to 398.01. For the week, the Russell rose 5.75, or 1.5 percent.
New York Stock Exchange volume on Friday totaled 834 million shares. Winning stocks outnumbered losers by more than 2-1 among NYSE-listed stocks.
“You’ve gone from lethargy to euphoria in this market over the last few days,” said Larry Wachtel, a market analyst at Prudential Securities. “I’m sure at sometime next week the Dow will be sweeping up toward 10,000.”
Prior to Thursday, stocks had been struggling amid uncertainty over whether company profits will justify the market’s huge rebound since early October, when the Dow dipped below 7500.
There also have been fears that the fast-growing economy would spur inflation and prompt the Fed to boost short-term interest rates.
The surge on Wall Street followed big gains overnight in global financial markets. Japan’s main market index climbed 5 percent on the best day of trading of this year. In London, the Financial Times-Stock Exchange 100 index gained 1.7 percent, while main market indicators rose 2.5 percent in Frankfurt and Paris.
