Profit Reports Push Stocks Mostly Higher
Market Overview * Corporate earnings took the spotlight Tuesday, pushing stocks mostly higher, although blue-chip issues ended unchanged at the previous session’s record high.
* Treasury bond yields drifted lower, pushing up prices on pent-up demand from investors who had refrained from purchasing bonds in recent months.
* The dollar declined across the board in largely technical trading on world currency markets.
Stocks
Caught in a cross-fire of profit taking and strength in economically sensitive stocks, the Dow Jones industrial average matched its record of 3,870.29, set Monday, while advancing issues outnumbered declines by about 4 to 3 on the New York Stock Exchange. Big Board volume was an active 309.73 million shares.
The Nasdaq index edged up 0.84 of a point to 793.02, surpassing its record closing high of 792.31 set Jan. 14.
“The last two hours (Nasdaq stocks) started sneaking on the upside. But it was not much of a rip-roaring day,” said Bob Padala of Donaldson, Lufkin & Jenrette.
Fourth-quarter profit reports from the nation’s companies began in earnest this week, and on Tuesday the market was flooded with word of records from the likes of Chrysler and Chase Manhattan.
But while Chrysler rose 3/4 to 62 1/2 and Chase rose 3/8 to 35 7/8, Wells Fargo slipped 2 3/8 to 133 3/4, Chemical Banking dropped 1 to 40 1/2 and Banc One fell 7/8 to 36 7/8.
James Solloway, director of research at Argus Research Corp., attributed the lack of investor interest in financial shares, despite solid earnings, to the shift away from interest-sensitive issues.
Since October, 1990, the industrial average has risen steadily, driven principally by an unprecedented decline in interest rates. Long-term rates, at about 6%, are the lowest since the Treasury began issuing 30-year bonds in 1977.
Low interest rates encourage stock investors because they cut the cost of money to companies and makes share prices more appealing.
But now, analysts say that as the economic recovery gathers steam, rates may have reached their bottom and the focus is shifting to corporate profits.
“The better earnings are driving the market now,” said William LeFevre, senior market analyst at Ehrenkrantz King Nussbaum.
Among the market highlights:
* The players in the bidding war for Paramount Communications were active again after Viacom sweetened its bid for the media giant. Paramount rose up 1 1/4 to 80, while QVC Network lost 1/2 to 43 in Nasdaq trading. Viacom Class B stock fell 1 3/8 to 37 3/4 on the American Stock Exchange.
Economically sensitive, or cyclical stocks, have been the catalyst for the market’s most recent run into record ground. On Tuesday, International Paper rose 1 7/8 to 74 3/8 and W.R. Grace rose 1 to 42 5/8.
* Chemical Waste Management gained 5/8 to 11 after Prudential Securities upgraded the stock.
* Eli Lilly, which announced that it will divest its medical devices and diagnostics operations to focus on its core pharmaceutical business, rose 1 5/8 to 61 1/2. * Cott lost 2 1/8 to 24 7/8 after Mabon Nugent cut a rating on the stock.
* Genzyme rose 3 1/4 to 34, although the company said there was no news to push the stock higher.
* BMC Software fell 2 3/8 to 60 7/8. The company acquired software developer Patrol Software and its Australian affiliate for $33.7 million in cash.
Stocks ended mixed abroad, with the Mexico City’s Bolsa index rising 50.29 points to 2,556.62, bolstered by hopes the conflict in Chiapas would be resolved soon, traders said. In Tokyo, the key 225-share Nikkei average closed at 18,514.55, down 210.82 points, while London’s Financial Times 100-share average rose 29.2 points to 3,437.0. Germany’s 30-share DAX average ended at 2,113.84, down 23.54 points.
Other Markets
The Treasury’s main 30-year bond yield fell to 6.26% from 6.29%. Prices, which move in the opposite direction, rose 9/32 point, or $2.81 per $1,000 in face value.
The government securities market was closed Monday for the Martin Luther King Jr. holiday.
Late last year, many investors were worried that bond prices had little room to rise further after a powerful yearlong rally. But a price surge in early 1994 has drawn many sidelined investors with money to spend back to the market.
Also lending strength to the Treasury market were purchases by cities and states seeking to stow proceeds from recent municipal bond sales.
Some Treasury traders also found encouragement in a decline in key commodity prices.
Meanwhile, in currency trading, the dollar opened on a relatively strong note as trading resumed after Monday’s holiday. But the upward move ran out of steam later in the day.
In New York, the dollar closed at 110.76 Japanese yen and 1.747 German marks, down from down from 111.10 yen and 1.743, respectively, on Monday.
In commodities trading, gold for current delivery settled at $393.10 an ounce, up $1.50 from Monday on the New York Comex. At the same time, silver settled at $5.326 an ounce, up 1.7 cents.
On the New York Merc, light, sweet crude oil sank 23 cents to $14.87 a barrel.
Market Roundup, D6
