2nd-Quarter Results Boost Market : Dow, Fueled by Earnings Reports, Rises 28.38 to New High

The earnings-driven market was alive and well Tuesday as prices on Wall Street closed sharply higher in response to positive second-quarter reports.

The Dow Jones average of 30 industrials reached another record close, climbing 28.38 to 2,481.35. The previous closing high, reached July 8, was 2,463.97. The Dow was up 14.19 that day.

Advancing issues outpaced decliners Tuesday by a margin of about 11 to 6, with 1,005 stocks up, 550 down and 426 unchanged on the New York Stock Exchange.

Big Board volume totaled 185.85 million shares, against 152.46 million in the previous session.

“Earnings reports have been in line or better than projected, and this has given the market a boost,” said Michael Metz, an analyst with Oppenheimer & Co.

The market picked up steam on profits reported Monday and Tuesday by several computer companies, including Apple, Intel and NCR, said Lawrence Wachtel, a market strategist with Prudential-Bache Securities Inc.

However, analysts said the market shrugged off disappointing results from IBM, which said Tuesday its profit fell 9.8% from its level of a year earlier.

The decline was less than expected by most analysts, but Big Blue stock--which reached new levels in the previous session--fell because the market had expected more positive results.

“The bullish factor is that the setback in IBM has not affected other technology stocks or the market as a whole,” Metz said.

IBM was sharply lower, closing down 2 3/8 at 167 1/2. However, Digital Equipment was up 2 1/2 to 166 1/8; Texas Instruments rose 2 1/2 to 62 3/4, and Data General jumped 1 to 31 1/2.

Auto stocks also did well. “The feeling is the low point in sales may be behind and maybe they’ll have a better second half,” Metz said.

Ford was up 3 to a new high of 106 5/8; General Motors jumped 2 to 85, and Chrysler rose 1 3/8 to 38 1/8.

Analysts said traders were optimistic about the release today of the Commerce Department’s balance of trade figures.

There was speculation that the May deficit would total $11 billion, less than the consensus of $13 billion to $14 billion of many economists, Wachtel said.

“People are not concerned,” Metz said. “Apparently Wall Street feels the underlying trend is improving, and they’ll look beyond it (the figures) even if one month is bad.”

Leading the NYSE most active list was AT&T;, which picked up 7/8 to close at 30.

Among the other big gainers were Sears, Roebuck, which was up 1 1/8 at 51 3/8, Teledyne, which rose 3 1/2 to 372 and Merck, which soared 4 3/4 to 179 3/8.

Losers included Texaco, which slipped 3/8 to 43 3/4 after Australian investor Robert Holmes a Court for the third time in a week indicated that he had raised his stake in the oil company.

Monsanto fell 3 to 84 1/2, and United Brands dropped 3/4 to 39 1/2.

In the bond market, meanwhile, prices finished mostly higher in light trading, buoyed by the speculation that the United States may register a smaller-than-expected merchandise trade deficit for May.

The Treasury’s 30-year bond rose 5/16 point, or about $3.15 per $1,000 in face value. Its yield declined to 8.50% from 8.53% Monday.

Corporate and municipal issues were unchanged to 3/8 point higher.

Bond prices drew support from speculation that today’s report of the U.S. merchandise trade deficit for May could show a smaller gap than expected, said Maria Ramirez, a managing director of Drexel Burnham Lambert.

A narrowing of the deficit would reflect heightened foreign demand for dollars to buy U.S. goods, thereby strengthening the value of dollar-denominated assets, such as notes and bonds. It would also relieve pressure on the U.S. government to seek a cheaper dollar.

Analysts said the market shrugged off the Commerce Department’s report that retail sales edged up 0.4% in June, the fourth straight month of virtually unchanged sales.

“It’s pretty much of a wash,” said Maury Harris, an analyst for the investment firm Paine Webber Inc., referring to the retail sales figures.

In the secondary market for Treasury bonds, prices of short-term government issues were unchanged to 3/32 point higher, intermediate maturities rose 5/32 point to point and 20-year issues jumped 5/8 point, according to Salomon Bros.

The movement of a point is equivalent to a change of $10 in the price of a bond with a $1,000 face value.

In corporate trading, industrial issues rose 3/8 point and utilities were unchanged in light activity.

In municipal issues, government obligations were flat and revenue bonds advanced 3/8 point in light trading, Salomon Bros. said.

Yields on three-month Treasury bills, meanwhile, fell 4 basis points to 5.57%. Six-month bills advanced 4 basis points, to 5.53% and one-year bills slipped 1 basis point to 6.09%.

The federal funds rate, the interest on overnight loans between banks, was quoted late in the day at 6.44%, down from 6.56% Monday.