Blue-chip stocks pushed higher into record territory Wednesday on the hope of lower interest rates, but technology stocks depressed the broader market.
The Dow Jones industrial average rose 18.06 to 5,041.61. That was less than half its intraday gain of 44 points, but still far above the previous record high close of 5,023.55 set Tuesday.Having closed for the first time above 5,000 on Tuesday, the blue-chip index glided smoothly past that benchmark and on to higher ground, with economically sensitive issues leading the advance.
"The market is placing a bet on a couple things, and it's a dicey bet," said Alfred E. Goldman, vice president at A.G. Edwards & Sons Inc. in St. Louis.
Investors are betting that once Congress and the White House agree on a budget, the Federal Reserve will lower interest rates, and that as a result of the lower rates, "the economy kicks up into a moderately higher gear," Goldman said.
Cyclical stocks, which tend to respond first to changes in the economy, should benefit the most from lower interest rates and were thus bid higher, Goldman said.
The 30 Dow industrial names were led higher by cyclical names Alcoa, up 25/8 at 573/4; United Technologies, up 11/4 at 92; DuPont, up 21/8 at 671/4; and IBM, up 7/8 at 953/8.
Autos, papers, metals, transportation issues - all heavily cyclical, made strong gains.
"Stocks with more predictable earnings, strong balance sheets and growth stocks have attracted some interest," said Alan Ac-ker-man, senior vice president at Fahnestock & Co.
Although the Dow components were showing remarkable resilience, the market gains were narrow. Advancers had a tiny lead on declines on the New York Stock Exchange. Volume was heavy at 404.9 million shares on the Big Board, but that was below Tuesday's pace.
And broad-market indexes, in which more speculative and smaller-company stocks are more heavily represented, were lower.
The NYSE's composite index fell 0.52 to 319.71. The Standard & Poor's 500-stock index fell 1.84 to 598.40. The Nasdaq composite index fell 3.00 to 1,021.99. The American Stock Exchange's market value index fell 0.22 to 528.33.
Technology shares lost ground. Those on the Big Board, except for IBM, declined, including Micron Technology, down 31/8 to 471/2; Mo-tor-ola, down 11/4 to 597/8; and Texas Instruments, off 21/2 to 521/2.
Internet-related stocks took big hits for the second straight day, including Netscape, down 21/4 to 1051/2; UUNet, off 21/2 to 701/2; Spyglass, down 7 1-16 to 831/2; and Netcom, off 55/8 to 61.
Consumer-oriented stocks were lower. The University of Michigan's November consumer sentiment index reportedly fell to 88.2 from 90.7 in October.
Bringing up the rear among the Dow 30 were consumer stocks Proc-ter & Gamble, down 11/4 to 851/4; General Electric, down 11/8 to 661/4; and Coca-Cola, off 13/4 to 75.
Stocks firmed despite a 1/8-point dip in long-term bond prices, following a Commerce Department re-port that the U.S. trade deficit deficit declined to $8.35 billion in September, as the deficit with Japan narrowed to the smallest imbalance in more than two years. The improvement surprised economists, many of whom had been expecting the deficit would widen sharply.
And the Commerce Department said business inventories rose 0.3 percent in September. That was in line with analysts' expectations and suggests an economy growing at a modest pace.
Separately, the Labor Department said the number of Americans filing new claims for unemployment benefits edged up to 371,000 last week from 370,000 the previous week. Both figures, however, were down from the level of 381,000 hit for the week ended Nov. 4.
Meanwhile, London stocks hit a record high, partly on Tuesday's record rise in the Dow average but also because of excitement over a 3.4-billion-pound takeover bid by Granada, a leisure and television group, for Forte, a leisure and hotels business.
The Nikkei index in Tokyo fell 0.79 percent, and the DAX index in Frankfurt lost 0.54 percent. But Paris's CAC index added 0.14 percent, and in Mexico City, the IPC index gained 3.52 percent following strong buying by foreign investors and a sharp drop in interest rates.