STOCKS : Strong Profit Reports Fill the Market’s Sails

Predictions of a healthier economy and a steady investor zeal for stocks sent the Dow Jones industrial average soaring Wednesday to an all-time closing high.

The average of 30 industrial stocks closed at 3,004.46, up 17.58 points, breaking the previous record of 2,999.75 on July 16 and 17, 1990. It was the first time the Dow had closed above 3,000.

Other indexes that track the wider market, such as the Standard & Poor’s 500 and NASDAQ composite, have closed in record territory in recent weeks.

The Dow record came on heavy volume. On the New York Stock Exchange floor, 246.93 million shares traded hands, up from 214.48 million the previous session.

In the broader market, advancing issues outnumbered declines by 9 to 5 in nationwide trading of NYSE-listed stocks, with 1,032 up, 576 down and 501 unchanged.

Also lifting the market was a series of strong earnings reports.

American Telephone & Telegraph said its first-quarter earnings rose 6.6% from a year ago despite the recession and flat revenue in its long-distance telephone network. AT&T;’s stock rose 5/8 to 37 7/8.

Shares of Illinois-based Waste Management rose 1 7/8 to 40 3/8 after it reported earnings of $1.74 billion for the first quarter, compared to $1.21 billion a year earlier.

Other blue chips were higher. Ford Motor gained 3/8 to 32 1/2, Boeing rose 1/2 to 47 and IBM was up 5/8 to 109 7/8.

Credit

Bond prices ended slightly higher amid fears that the stock market’s record-breaking performance may siphon investor interest away from government securities. Shorter-term securities ranged from unchanged to slightly lower.

The Treasury’s bellwether 30-year bond was up 3/32 point, or 94 cents per $1,000 in face amount. Its yield, which moves in an opposite direction from price, slipped to 8.10% from 8.11% late Tuesday.

Bond prices, which were up as much as 13/32 point early in the day, lost ground as traders watched the Dow average crack the 3,000 mark.

Steven R. Ricchiuto, chief economist with Barclays de Zoete Wedd Government Securities Inc. in New York, said the record high led to worries that some bond market investors might “get enticed to go into stocks.”

The pessimism reversed early gains related to news that the nation’s 235,000 rail workers struck major freight carriers in their first strike in a decade. The walkout shut down cargo traffic and upset passenger travel around the country.

The economic disruption was viewed as possibly boosting demand for government securities, which are often bought as a hedge against sour times.

The federal funds rate, the interest on overnight loans between banks, fell to 4.50% from 5% Tuesday. Reduced demand in recent days has pushed the federal funds rate below its perceived target of 6%.

Currency

The dollar rose in quiet trading as dealers probed for clues to possible changes in U.S., German and Japanese interest rates.

“There is total confusion about U.S. interest rates--up, down or sideways--so people have decided to make a play on speculation about German and Japanese interest rates,” said Jose Gonzalez at the National Bank of Detroit. “You have to create something to trade on.”

The dollar posted its largest gain against the Japanese yen. It closed in New York at 136.185 yen, up sharply from 134.60 Tuesday.

The dollar rose to 1.66835 German marks in New York from Tuesday’s 1.6648.

Commodities

Futures prices for most metals rose as the strong stock market stoked optimism that the economy is turning around.

On other commodity markets, grain and soybean futures fell, oil futures rose and livestock and meat futures fell.

Futures prices for copper, silver, platinum and palladium--all industrial metals or precious metals with industrial uses--jumped sharply as the Dow climbed.

“The perception is that the stock market is not concerned any more about lower corporate earnings and is focusing now on the economic recovery,” said Bette Raptopoulos, senior metals analyst with Prudential Securities Inc. in New York.

Fred Demler, metals economist with Paine Webber Inc. in New York, said the buying that lifted the metals reflected “euphoria about the economy turning around.”

Gold was the weakest performer among the precious metals, settling 40 to 70 cents higher on the Commodity Exchange, with April at $361.80 an ounce.

Oil prices rallied on the New York Mercantile Exchange on news that the nation’s supply of gasoline had fallen to its lowest level in nearly 16 years.

Light, sweet crude was 7 cents higher, with May at $21.71 a barrel.

Market Roundup, D8