News of Iraq Oil Deal Sends Dow Back Into Record Books

The Dow Jones industrial average on Monday jumped to its first record since early April as the prospect of cheaper fuel with the resumption of Iraqi oil sales reinforced optimism about the course of inflation.

Broader indicators also rallied to new highs.

The Dow 30 ended 61.32 points higher at a record 5,748.82. The previous high of 5,689.74 was set April 3. Monday’s rise came on top of last week’s gain of 169 points--the Dow’s biggest weekly point gain this year. It was also the first close above 5,700.

The barometer of 30 big U.S. companies has now risen for nine straight sessions, rebounding by more than 406 points, or about 7 1/2%, from selling that had been fueled by worries about inflation.

Today, the Federal Reserve Board’s policymaking Federal Open Market Committee meets to weigh monetary policy amid reports pointing to moderate economic growth and subdued inflation.

“The conclusion is the Fed will not do anything with rates, and that allows the market to breathe a huge sigh of relief,” said Philip Orlando, chief investment officer at ValueLine Asset Management.

The Fed has kept rates steady since January, when it lowered interest rates for a third time in seven months.

But it was the news that Iraq had agreed, after months of negotiations, to a U.N. deal for limited oil sales that accounted for a big part of the Dow’s gain. The index’s three oil stocks--Exxon, Texaco, and Chevron--accounted for nearly half Monday’s Dow rise. Texaco was up 3 1/8 to 87 7/8, Exxon was up 2 1/2 to 87 1/4 and Chevron was up 2 1/2 to 62.

On the New York Mercantile Exchange, June crude oil finished up $1.84 at $22.48 a barrel, after having initially fallen to a two-month low at $19.85 on news of the agreement.

The New York Stock Exchange composite index rose 2.31 points to 361.09, and the Standard & Poor’s 500-stock index rose 4.24 points to 673.15. It was a second consecutive record high close for both indexes, which are dominated by larger companies.

The Nasdaq composite index rose 6.23 points to 1,248.11, for its 27th record high of the year. The American Stock Exchange’s market value index rose 4.15 points to 609.36. Those were the third consecutive record high finishes for the two indexes.

The Russell 2,000 list of smaller companies set a record for a seventh straight session, rising 2.44 points to 363.07.

Stocks were also lifted by continuing strength in the bond market. The yield on 30-year Treasuries--a benchmark for the rates charged on many loans--remained steady at 6.83%.

In recent weeks, that rate has moved above 7% twice, troubling stock players concerned about higher corporate borrowing costs, slower consumer spending and competition from bonds.

Among market highlights:

* General Electric rose 3 1/8 to 84 1/2 on news that GE Capital Services, its financial unit, agreed to acquire AmeriData Technologies for $16 a share, or $490 million. AmeriData rose 3/8 to 15 3/4.

* Chiron soared 5 1/4 to 102 after the biotech company declared a 4-for-1 stock split.

* Toys R Us was up 7/8 at 30 3/4 after the retailer reported first-quarter earnings in line with analysts’ expectations.

* Beleaguered ValuJet shed 1 7/8 to 11 1/4. The airline said late Friday that it had decided to cut the number of its daily flights in half so it could inspect its entire fleet. The move followed the fatal crash of a ValuJet plane in Florida.

* Shares of base metals producers slumped as rising supplies drove copper futures prices to their lowest level since April 1994. Alcoa fell 1 7/8 to 63 1/2, Reynolds Metals was off 1 1/2 to 53 7/8, Alumax was off 1 3/8 to 33 and Phelps Dodge lost 1 3/8 to 70 1/2.

On New York’s Commodity Exchange, July copper closed down 4.40 cents at 111.20 cents a pound.

Overseas, Mexico’s Bolsa index rose to a record high as falling interest rates and news pointing to a reviving economy improved the outlook for company earnings. The Bolsa jumped 56.84 points, or 1.74%, to 3,316.21.

The dollar hit a four-week high against the yen after Japan reported the steepest decline in its trade surplus with the U.S. in 17 years. The dollar was at 107.08 yen in late New York trading, up from 106.77 yen late Friday.