NEW YORK, AUG. 5 -- Stocks climbed to near-record levels in active trading today as a bond market rebound spurred short covering, futures-linked selling and new commitments of cash to equities.
The Dow Jones industrial average climbed 19.93 points to 2566.65 after edging above its record closing levels in late trading.
The Dow's record high close, set Friday, is 2572.07. An hour before the closing bell today, the Dow was above that, at 2573.18. Profit taking trimmed some of the day's sharpest gains.
Ernie Rudnet, manager of block trading at Mabon Nugent & Co., said the improving bond market prompted purchases from foreign investors and "a lot of short covering," in which sellers of borrowed stocks who previously had anticipated prices would fall bought securities because they feared they would lose money as the market rose.
Rudnet said that barring flare-ups in the Middle East, the cash portfolio managers have to invest in a rising market will provide the impetus for stocks to move still higher.
Advancing issues outpaced declines by 3 to 2 on the New York Stock Exchange.
Broad market indexes reflected those gains. The New York Stock Exchange composite index jumped 1.15 to 178.54, just under its record close of 178.64, set Friday. Standard & Poor's 500-stock index rose 2.22 to 318.45, just below its record of 318.66, also set Friday. The price of an average share jumped 27 cents.
Big Board volume was 192,720,000 shares, compared with 166,490,000 Tuesday.
"The Dow's going to 3000," said Robert Kahan, manager of equity of trading at Montgomery Securities in San Francisco.
Kahan linked today's strength to the bond market's recovery. But he said if the rebound in bonds proves to be only a brief interruption of that market's recent weakness, stocks will find other reasons to support their move up.
"We'll have our down days, but the market has a long way to go," Kahan said. "
On the Big Board, AT&T was the most active NYSE-listed issue, rising 7/8 to 32 7/8.
Hanson Trust followed, rising 5/8 to 15 1/8; Kidde was third, climbing 2 1/4 to 66 1/8. Kidde agreed to be acquired by the U.S. branch of Hanson Trust PLC, for $60.10 in cash plus seven-year warrants to buy Hanson shares at $18 each