Dow on Brink of High; Bond Prices Climb

Investors pushed broad stock averages to new highs Thursday but left the Dow industrials just shy of a record.

Meanwhile, U.S. bond prices edged higher on economic news that reduced the chances of an interest rate hike by the Federal Reserve Board.

The Dow Jones industrial average ended up 58.35 points at 7,777.06, just below its record closing high of 7,782.04 set June 13. The 30-stock blue-chip index rallied briefly through 7,800 for the first time, cresting at 7,810.54 before sliding back.

Stocks were supported throughout the session by a rebound in computer-related issues, which were hit earlier this week on projections of poor demand. Tobacco stocks got a lift from expectations that the industry would settle lawsuits with 40 states.

Traders said stocks also benefited from a burst of buying prior to today’s “triple witching” expiration of futures and options.

“The triple witching tends to exaggerate any kind of trend that you already have in place in the market,” said Bob Dickey, a technical analyst at Dain Bosworth Inc.

Advancing issues outnumbered decliners by more than 2 to 1 on the New York Stock Exchange in heavy trading. Three broad indexes reached new highs.

The Standard & Poor’s 500-stock list rose 8.93 points to 897.99 and the Nasdaq composite index rose 14.71 points to 1,447.14. Both topped all-time highs set uesday. The NYSE’s composite index rose 4.35 points to 467.76, eclipsing its closing high set last Friday.

Stocks were boosted after the Commerce Department reported that the nation’s foreign trade deficit swelled 7.8% in April. The gap was slimmer than economists had expected.

Meanwhile, the Labor Department reported that first-time claims for jobless benefits jumped by 8,000 last week to 347,000, the highest since May 8. Economists had forecast a decline of 8,000. The less volatile four-week average also rose by 6,250 to 335,500.

The price of the benchmark 30-year Treasury bond waffled in the late morning but climbed a little in the early afternoon, pushing its yield down to 6.67% from 6.68% late Wednesday.

The market was also propelled by an upbeat forecast by Prudential Securities’ well-known market bull, Ralph Acampora, who raised his targets for the Dow to 10,000 in the next year.

Acampora, Prudential Securities’ director of technical research, advised people to “remain fully invested--we expect the stock market to mount an explosive advance during the second half of the year,” he wrote in a report.

Among Thursday’s highlights:

* Spurring the Dow’s gain was Philip Morris, which climbed 2 to a record 47 1/2. Other tobacco issues gained. RJR Nabisco Holdings rose 1 3/8 to 35 7/8. Smokeless-tobacco maker UST added 3/4 to 30.

Dow component Merck rose 3 3/8 to a record 99 3/4 on expectations of higher sales of cholesterol drugs.

Other drug issues were boosted too. Warner-Lambert rose 6 7/8 to 112 3/4, Pfizer Inc. climbed 4 1/8 to 112 1/2, Pharmacia & Upjohn rose 1 1/2 to 34 3/4 and Bristol-Myers Squibb climbed 1 1/4 to 78 1/2.

* Tech issues recovered from several sessions of declines after discouraging projections of market demand. On the Big Board, IBM rose 5/8 to 89 5/8 and Gateway 2000 rose 1 1/8 to 33 1/8. Seagate Technology was unchanged at 36 1/4.

In Nasdaq trading, Microsoft declined 7/8 to 129 5/16, while Sun Microsystems rose 1 3/16 to 36 3/4.

Among the day’s biggest losers was Adobe Systems, off 4 1/4 to 36 after reporting weaker-than-expected earnings.

* Major airlines fell after Goldman Sachs & Co. downgraded the issues, citing a possible change in the federal airline tax. UAL declined 2 3/8 to 71 7/8, Delta dropped 1 to 88 1/4 and AMR was off 2 to 93 1/4.

* ARM Financial Group jumped 3 7/8 to 18 7/8 in its first day of trading amid strong earnings prospects.

In overseas trading, the Nikkei index in Tokyo rose 0.05% and the DAX index in Frankfurt rose 0.51%. But the FTSE-100 index in London slipped 0.07%.