Dow Climbs 13.23 for 3rd Record in Row : Several Positive Earnings Reports Boost Investor Confidence
The stock market rang up another gain Thursday, pushing the Dow Jones industrial average close to the 2,500 level with a lift from positive corporate earnings reports.
Dow Jones’ average of 30 blue chips rose 13.23 to 2,496.97, hitting a record closing high for the third consecutive session.
Volume on the New York Stock Exchange reached 210.88 million shares, against 202.29 million in the previous session.
Analysts noted that second-quarter earnings reports of several major companies have lived up to or exceeded investors’ high hopes.
A case in point was American Telephone & Telegraph, which reported Thursday morning that its second-quarter profit increased to 55 cents a share from 37 cents in the comparable period last year.
AT&T; stock climbed 1 1/2 to 31 3/4, trading at new highs since the breakup of the old Bell System, when the company divested seven regional operating companies.
Philip Morris, another component of the Dow Jones industrial average, gained 2 1/8 to 95 3/8. The company posted second-quarter earnings of $2 a share, up from $1.58 in the same period last year.
Merck, yet another Dow stock, picked up 3 5/8 to 183 1/8 on second-quarter net of $1.72 against a comparable figure of $1.23.
Brokers said investors also were impressed by the way the market withstood the jolt of a disappointing government report Wednesday on the nation’s trade deficit. The dollar and bond prices fell on the news, but stocks recovered from a brief decline to finish mixed.
Advancing issues outnumbered declines by about 3 to 2 in the overall tally on the NYSE.
In the credit markets, meanwhile, prices rose as investors regained their strides following the release of the trade deficit report.
The price of the Treasury Department’s 30-year bond, which dropped 1.188 or about $12 per $1,000 in face amount in the previous session, rose 3/16 point, or nearly $2. Its yield fell to 8.59% from 8.61% Wednesday.
“The turnaround in the dollar helped,” said Elliott Platt, research director at Donaldson, Lufkin & Jenrette Securities Inc. The dollar, which also fell on Wednesday, rebounded on Thursday.
Another factor was a lower-than-expected federal funds rate, said Brusca. The fed-funds rate, the interest charged on overnight loans between banks, fell to 6.5% from 6.75% Wednesday.
Traders interpreted the favorable rate as a sign the Federal Reserve Board would not tighten credit, Brusca said.
In the secondary market for Treasury bonds, prices of short-term governments rose about 1/16 point, intermediate maturities were 3/32 point to 5/32 point higher and long-term issues rose 5/16 point.