Dow Leaps 19.77 to New High as Cash-Rich Investors Go on Spree

NEW YORK — Stock prices moved strongly and broadly higher Wednesday, as cash-laden investors focusing on blue chips sent the Dow Jones index of 30 industrials to its second straight record high.

After wallowing in single-digit losses during the morning, the closely watched index rallied to close out the session at 2,539.54, up 19.77 from Tuesday’s previous record of 2,519.77.

NYSE volume totaled 196.18 million shares, up from 172.60 million on Tuesday and 152.04 million on Monday.

Advancers outpaced decliners by about 2 to 1 on the NYSE, with 1,045 issues up, 515 down and 426 unchanged.

It was the sixth straight winning session, supported mainly by an ocean of liquidity seeking to find a home, analysts said. They said traders grew more encouraged when the morning’s selloff fizzled.

And they said prices were generally benefiting from the diminishing numbers of available shares that has come with the recent wave of mergers, buybacks and acquisitions.

“There is simply an overwhelming amount of money, particularly in the hands of foreign investors, who have been primarily directing their attention at blue chips,” said Larry Wachtel, an analyst at Prudential-Bache Securities Inc.

Wachtel and others said big institutions, including mutual funds, also have been big buyers, driven into equities in part by the stagnating bond market.

However, bond prices rose Wednesday as Congress moved closer to approving legislation that would get the Treasury Department back to its regular schedule of government securities auctions.

Some market watchers had expressed fears that the market was heading into dangerous territory because the gains in the Dow index until late Wednesday had mainly been driven by especially strong performances among select issues.

Several media stocks also rose sharply Wednesday, including Affiliated Publications, publisher of the Boston Globe, up 5 to 75 1/2. Affiliated reportedly became entangled in the takeover rumors that have lifted many U.S. publishing shares this week. Wall Street feels that British publisher Robert Maxwell is looking for a U.S. takeover target after failing to win Harcourt Brace Jovanovich. Affiliated said it had had no contact with Maxwell.

Takeover rumors also pushed up the price of MacMillan Publishing Co., which gained 2 7/8 to 71, and McGraw-Hill, which rose 2 to 76 1/2.

Times Mirror, publisher of the Los Angeles Times, rose 5 to 102, but Times Mirror officials said the volume of the stock was not extraordinary and attributed the rise to recent interest in media stocks, as well as its positive earnings report last week.

The company, which adopted measures more than a year ago that it said would make a takeover unlikely, said it had not heard of any takeover rumors related to Times Mirror.

Among the NYSE’s most active issues, Boeing was down 7/8 at 52 7/8; American Express was up 7/8 at 37, and Merck was up 7/8 at 189. All three are among the Dow 30 industrials and had gained strongly Tuesday.

In the credit markets, meanwhile, corporate and municipal issues were mostly unchanged.

The bond market opened little changed in extremely thin trading, but prices rose late in the day when market participants heard that lawmakers were approaching a compromise on the Gramm-Rudman deficit-cutting law.

The Treasury’s 30-year bond was up 21/32 point, or about $6.25 per $1,000 in face amount, while its yield fell to 8.79% from 8.86%.

In the secondary market for Treasury bonds, prices of short-term government bonds were 1/32 point to 3/32 point higher, intermediate maturities were 3/16 point to 15/32 point higher, and 20-year issues rose 17/32 point.

In corporate trading, industrials and utilities were unchanged.

Among tax-exempt municipal bonds, general obligations were unchanged, while revenue bonds rose point. Trading was light.

Six-month bills were down 3 basis points to 6.05%; one-year bills were unchanged at 6.39%.

The federal funds rate, the interest on overnight loans between banks, traded at 6.68%, up from 6.50% on Tuesday.