The Dow--Wow! : Sure, 4,000 Is Exciting, but Now What?

Twenty-eight minutes after the opening bell clanged at the New York Stock Exchange on Thursday, cheers erupted from the trading floor. The Dow Jones industrial average had finally, for the first time, reached 4,000.

“I started in this business in 1963 and I’ve seen everything, and it’s an exciting time to be in the marketplace,” said Jack Baker, stock trading chief at brokerage Furman, Selz in New York.

From professionals like Baker to individual investors stopping by their local brokerage, the surpassing of 4,000 sparked different emotions--hope, caution, nostalgia, excitement and indifference. But it had no impact on the disagreements over where the market is headed.

Eliezer Gindi, a retired machinist, said the record makes him more likely to sell than buy and that getting swept up in the 4,000 hype would be a mistake.

“In order to make money, you have to be patient and not get excited,” Gindi said while checking stock quotes at a Los Angeles office of the Charles Schwab brokerage.

Indeed, on the NYSE, the morning applause upon reaching 4,000 soon dissipated as traders went back to work. Many doubted whether the market, despite the record, could sustain its gains throughout the day.

On the Los Angeles floor of the Pacific Stock Exchange, there was barely a flurry when the historic mark was eclipsed at 6:58 a.m. local time.

“The floor didn’t go up in an uproar or anything,” said Harvey Cloyd, who runs a floor brokerage bearing his name at the PSE. “We were all anticipating it.”

At the NYSE’s closing bell, the Dow Jones average of 30 industrial stocks had climbed 30.28 points to 4,003.33.

Like other “millennium” milestones, the 4,000 level stood mostly as a psychological barrier for investors to overcome and held little value for gauging the market’s overall future strength, analysts said. The Dow industrials, after all, represent a mere 30 issues out of the thousands traded daily.

Excitement over 4,000 is “probably based on the fact we have 10 fingers and 10 toes,” quipped A. Gary Shilling, president of a Springfield, N.J., investment firm carrying his name.

Even some individual investors looked warily at the record. Said word processor Steve Mereu: “I’m not sure what (crossing 4,000) means yet--it might mean nothing.” He said it would take a few weeks to see whether Thursday’s euphoria spills over to the rest of the market.

The 4,000 mark “will make all the newspapers, but it’s a little dangerous” to view it as signaling a bullish stock market, said Mike Scafati, a mutual fund analyst at A.G. Edwards & Sons in St. Louis. “No one really knows what segments of the market are going to move next.”

However, many traders did expect the 4,000 level to be breached Thursday because of comments made the day before by Federal Reserve Board Chairman Alan Greenspan, who suggested that the central bank might not raise interest rates again soon.

It was the Fed’s repeated rate increases over the past 12 months that dogged the stock market. The Dow had come within 25 points of 4,000 in February, 1994, but then waffled amid the steady rise in lending costs.

The market’s surge Thursday “confirms that Greenspan is the most powerful person in the United States,” said Robert Sobel, a business historian at Hofstra University in New York and author of several books about the stock market. “President Clinton couldn’t do this. Newt Gingrich couldn’t do this.”

Furman Selz’s Baker said that “there is no way in my estimation that the market can be held down right now. Greenspan’s comments set the tone for the next three to six months.”

There’s certainly room for many stocks to keep advancing, said Rad Artukovic, a Crowell Weedon & Co. specialist at the PSE who makes markets in such issues as Unocal Corp., Sara Lee Corp. and Burlington Northern Inc.

“There are still many stocks in their own private bear market,” Artukovic said. “The old saw still holds true: It’s a market of stocks, not a stock market.”

The Dow Jones industrial average, whose roots go back to the late 19th Century, didn’t close above 1,000 until 1972. But it reached 2,000 in 1987 (before the crash that year) and has doubled again in just eight years.

Nonetheless, some analysts say the average is still below its record high if one adjusts it for the inflation of the last 30 years.

At Schwab’s Los Angeles office, some individuals like accountant Joe Figueiredo hoped the market was riding a rising tide that would raise all boats. “It’s an important milestone,” he said of 4,000. “Pessimism in the market drives everything down, so this should help all stocks go up.”

But engineer Jawahar Shah said that after “telling my wife last Friday that the Dow would hit 4,000 by the end of this week,” he’s now unsure whether Thursday’s activity will lift the market higher or prompt many investors to take profits--pushing prices lower.

And some investors were more concerned about their own holdings than with the market’s overall outlook.

The Dow average “is not necessarily a magic number,” said Estella McElrath, who said she has money invested in mutual funds and in GM Hughes Electronics shares. “I care more about my own stocks.”

The same detachment was voiced by Brian Kent, a specialist with Ronald E. Melville Inc. at the PSE. As he stared at three computer monitors flashing prices in front of him, and the Dow hovering above 4,000, he said flatly, “It’s just another day.”

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

The Long Climb to 4,000

The Dow Jones industrial average closed above 4,000 on Thursday for first time ever, rising 30.28 points to a record 4,003.33. A look at the blue-chip index’s climb since 1970, and a sampling of significant cultural and economic trends at each of the Dow’s four “millennium” milestones.

Breaking 1,000: November 14, 1972 * In an effort to block a rush of supplies to Communist forces in South Vietnam, U.S. planes conduct heavy bombing raids in North Vietnam. * Charles Manson followers Lynette A. Fromme and Nancy Pitman are among five people arrested and charged with murdering a young Stockton woman. * Of the Dow’s long-awaited jump over the 1,000 mark, a Wall Street securities analyst says, “This is the greatest day in history!” * “All in the Family” is television’s most popular sitcom.

Breaking 2,000: January 8, 1987 * Auto makers release statistics showing that Americans took advantage of changes in federal tax laws and bought a record 11.4 million cars in 1986. * Gov. George Deukmejian, who boasted that he brought California from “IOU to A-OK,” presents a $37-billion budget--sporting a $900-million shortfall--to the Legislature. * President Ronald Reagan says he will ask Congress for $4.4 billion to build the world’s largest and most powerful atom smasher: the superconducting super-collider. * Market strategist William LeFevre predicts further growth in the Dow: “This will bring a lot of little investors into the market.”

Breaking 3,000: April 17, 1991 * Compaq Computer launches one of the fiercest PC price wars ever by slashing personal computer prices as much as 34%--bringing the cost of a new laptop down from $6,499 to $4,399. * Four Los Angeles police officers indicted for criminal assault in the beating of motorist Rodney G. King are notified that the Police Department will seek their dismissals. * Many market analysts are frightened of the 3,000 mark, including Larry Greenwald, a trader at brokerage Stanford C. Bernstein & Co., who laments, “There’s not a lot of euphoria here, as you might think there’d be.” * Television’s most popular watering hole, “Cheers,” is No. 1 in the ratings.

Breaking 4,000: Feb. 23, 1995 * In another sign that the state is winning its battle for economic recovery, Dun & Bradstreet announces that California business failures declined nearly 15% in 1994. * As the O.J. Simpson trial finished its fifth week, LAPD officers testify about their investigation of the slashing deaths of Nicole Brown Simpson and Ronald Lyle Goldman. * Diver Greg Louganis announces that he has been HIV-positive since before 1988, when he won four gold medals at the Olympics in Seoul, and that he now has AIDS. * Moviegoers continue to flock to “Forrest Gump,” which received 13 Oscar nominations last week, and “Pulp Fiction,” which got seven. * Analysts say Federal Reserve Board Chairman Alan Greenspan’s announcement that the Fed may not need to raise interest rates gave the market a boost.

Sources: Times reports, wire services. Researched by JENNIFER OLDHAM / Los Angeles Times

Dow Chronology

Key historic dates for the Dow Jones industrial average of 30 stocks:

* July 3, 1884: Dow Jones publishes its first average of U.S. stocks in the Customer’s Afternoon Letter, a forerunner of the Wall Street Journal.

* Jan. 12, 1906: Dow closes above 100 for the first time, at 100.25.

* Sept. 3, 1929: Reaches its closing peak for the bull market of the 1920s, at 381.17.

* Oct. 28, 1929: Plummets 38.33 points, or nearly 13%, closing at 260.64 and heralding the Great Depression.

* March 12, 1956: Closes above 500 for the first time, at 500.24.

* Nov. 14, 1972: Closes above 1,000 for the first time, at 1,003.16.

* Dec. 6, 1974: Closes at a 12-year low of 577.60, ending the worst bear market since the 1930s.

* Aug. 17, 1982: Rises 38.81 to 831.24, its largest one-day gain, as the bull market of the ‘80s begins.

* Feb. 24, 1983: Rises 24.87 to 1,121.81, its first finish above 1,100.

* Jan. 8, 1987: Breaks the 2,000 level for the first time, rising 8.30 to 2,002.25.

* July 17, 1987: Rises 13.07 to 2,510.04, first close above 2,500.

* Aug. 25, 1987: Reaches its ‘80s bull market peak of 2,722.42

* Oct. 16, 1987: Plunges 108.35 to 2,246.73, falling more than 100 points for the first time.

* Oct. 19, 1987: Plunges a record 508 to 1,738.74, a drop of 22.6% that became known as the Black Monday crash.

* Jan. 24, 1989: Rises 38.04 to 2,256.43, regaining its level of Oct. 16, 1987, for the first time since Black Monday.

* Jan. 2, 1990: Rises 56.95 to 2,810.15, reaching a record high for the first time since the Oct. 19 plunge.

* Aug. 3, 1990: Falls 54.95 to 2,809.65 after Iraq invades Kuwait; start of 1990 bear market. * Oct. 11, 1990: Reaches a bear market low of 2,365.10 on war news.

* Jan. 17, 1991: Soars 114.60 to 2,623.51 as allied bombing of Iraq begins.

* April 17, 1991: Rises 17.58 to 3,004.46, first close above 3,000.

* May 19, 1993: Rises 55.64 to 3,500.03, first close above 3,500.

* Jan. 31, 1994: Reaches 1994 peak of 3,978.36, days before Federal Reserve Board begins raising interest rates for first time in five years. By midyear, the Dow would fall to just under 3,600, pressured by higher interest rates.

* Feb. 23, 1995: Crosses 4,000 for the first time, rising 30.28 to close at 4,003.33, as Fed indicates it may be finished raising rates.

Source: Associated Press

From 3,000 to 4,000

Here are the 30 stocks in the Dow Jones industrial average and their percentage changes between April 17, 1991--when the Dow first closed above 3,000--and Thursday, when the index closed above 4,000 for the first time. Stock prices have been adjusted for any splits since April, 1991.

Closing prices: Pct. Stock 4/17/91 Thur. change Goodyear $11.31 $36.13 +219.5% AlliedSignal 15.00 38.50 +156.7 Caterpillar 24.75 53.00 +114.1 Coca-Cola 28.00 54.00 +92.9 McDonald’s 17.69 33.50 +89.4 Walt Disney 30.25 53.38 +76.5 Union Carbide 18.38 28.13 +53.0 Procter & Gamble 44.75 66.50 +48.6 GE 37.63 55.38 +47.2 United Technol. 45.63 66.13 +44.9 DuPont 40.13 55.25 +37.7 AT&T; 37.88 51.50 +36.0 Dow average 3,004.46 4,003.33 +33.2 Sears 37.38 48.25 +29.1 Alcoa 68.00 82.13 +20.8 3M 44.63 53.75 +20.4 Intl. Paper 64.88 78.00 +20.2 Eastman Kodak 42.88 50.88 +18.7 Chevron 39.69 46.75 +17.8 J.P. Morgan 54.00 63.00 +16.7 American Express 29.88 33.50 +12.1 Bethlehem Steel 13.75 15.38 +11.9 Merck 38.25 42.63 +11.5 GM 38.88 42.75 +10.0 Exxon 60.13 63.75 +6.0 Boeing 47.00 47.00 nil Texaco 68.88 63.75 -7.4 Philip Morris 70.63 59.50 -15.8 IBM 109.88 74.25 -32.4 Westinghouse 29.13 15.50 -46.8 Woolworth 32.75 15.13 -53.8

Where the Broad Market Stands

Though the Dow industrials hit a record high Thursday, many other stock market indexes remain well below their records. A sampling:

Thurs. Record close Pct. below Index close and date record close Dow industrials 4,003.33 Thursday Same S&P; 500 486.91 Thursday Same Nasdaq composite 791.35 803.93 on 03-18-94 -1.6% Russell 2,000 254.95 271.08 on 03-18-94 -6.0 Amex market value 449.35 487.89 on 02-02-94 -7.9 Dow transports 1,596.85 1,862.29 on 02-02-94 -14.3 Dow utilities 194.04 256.46 on 08-31-93 -24.3

* DOW PASSES 4,000

Rate optimism fuels record. A1

* HOW IT HAPPENED

A closer look at trading. D2, 3