Dow Rises 42, Nearing 7,500; Dollar Tumbles

The Dow Jones industrial average flirted with 7,500 for the first time and records fell along a broad front Monday as a surge of investor enthusiasm for blue-chip stocks carried over from Friday.

But bonds fell as investors took profits after last week’s gains. And the dollar fell sharply, renewing its recent decline.

The Dow index ended 42.72 points higher at 7,478.50, the second straight record finish for the blue-chip index. Including the day’s gains, the Dow has surged more than 1,000 points since the start of 1997.

“This market is surging--technically it’s fully in gear,” said Richard E. Cripps, chief market strategist for Legg Mason of Baltimore. “Most of the investors who we talked to still have a fair amount of cash.”

Advancing issues outnumbered decliners by a nearly 4-3 margin on the New York Stock Exchange in moderate trading.

The technology-heavy Nasdaq composite index rose 7.20 points to 1,412.04, its first new high in eight sessions.

Other indicators also set new highs despite a weak day in the bond market, where traders secured some profits from Friday’s sharp advance after the government reported modest job gains in May.

The yield on the benchmark 30-year Treasury bond rose to 6.82% from Friday’s three-month low of 6.78%.

Bonds may have been hurt by the slumping dollar. It fell against major currencies--dropping to a six-month low versus the Japanese yen--on concern over Japan’s growing trade surplus and potential delays in Europe’s single currency.

The dollar ended at 112.93 yen in New York, down a sharp 1.67 yen from Friday’s close.

A weaker dollar could encourage some foreign investors to sell U.S. bonds because of devaluation fears.

But what was bad for bonds was good for stocks: A weaker dollar may help U.S. exporters.

“For the most part, the groups going up today you could cover with the umbrella of exports,” said Greg Nie, technical analyst at Everen Securities. “Techs and drug companies are both beneficiaries of a declining dollar.”

Among Monday’s highlights:

* Technology issues, which struggled last week amid worries that computer demand has slackened, were among the day’s strongest issues. In the Dow, IBM rose 1 1/4 to 86 7/8 and Hewlett-Packard rose 1 1/8 to 53 3/8.

The Dow also drew support from the consumer products sector: Procter & Gamble rose 2 3/4 to 139, Johnson & Johnson rose 1 1/2 to 61 5/8 and Merck rose 1 1/4 to 93 1/2.

* On the downside, transport issues were weak. Delta Air Lines fell 2 1/4 to 91 3/4 after the airline said it sees its revenue for the fourth quarter as less than originally expected.

* Also, oil issues were weak as energy prices slid further. (Investor Spotlight, D14.)

Market Roundup, D12