Strong Profit Reports Fuel Broad Stock Rally : Markets: The Dow average sets another new record, climbing 39.43 points. But the dollar’s two-day rally fizzles as pessimism returns.
Strong quarterly earnings reports fueled a broad rally in stocks on Friday, with the Dow Jones industrial average setting another new record.
However, the dollar’s two-day rally evaporated Friday, as market participants turned pessimistic about whether leaders of the key industrialized nations will take strong steps to support the currency at a meeting next week.
The Dow Jones industrial average climbed 39.43 points to close at 4,270.09, well above its previous record closing high of 4,230.66 set on Thursday. For the week, the blue-chip index was up 61.91 points.
The NYSE’s composite index rose 1.67 to 274.76. The Standard & Poor’s 500-stock index climbed 3.20 to 508.49. The Nasdaq composite index advanced 4.43 to 823.44.
Stocks took heart from more reports of better-than-expected corporate profits for the first quarter.
“There’s just been a lot of positive surprises, and the market seems to be responding,” said John Church, chief investment officer at Glenmede Trust.
Some of the blue-chip companies that reported strong earnings this week included Eastman Kodak Co., International Business Machines Corp. and Sears Roebuck & Co.
IBM led Friday’s rally, adding 2 5/8 to 91 5/8 after rising 1 7/8 on Thursday after it reported record first-quarter earnings of $1.3 billion.
“All the things that were scaring people so badly . . . seem to not be of great concern today,” said Chris McLellan, head of trading at Robertson, Stephens.
Rising oil and precious metals prices and the slumping dollar had sparked fears that inflation pressures might be working their way into the economy. But the earnings reports grabbed investors’ attention as the week progressed.
Stocks also gained in trading linked to expirations of options and futures contracts. Traders said Friday’s “double witching” expiration of index future contracts added volume and volatility to an otherwise quiet session. No economic data were released that could have moved the market.
In the broader market, advancing issues beat decliners 1,311 to 846 on heavy trading of 403 million shares on the New York Stock Exchange.
Among Friday’s highlights:
* Stocks gaining on positive earnings reports included Kellogg, up 2 3/8 at 63 3/4 and Maytag, up 1/8 at $17 1/8.
* Health-care stocks rallied after taking significant losses earlier this week amid worries about lower pricing and narrowing margins. Humana gained 3/4 to 21 5/8, United Health Care rose 1 1/8 to 40 3/8 and US Healthcare added 7/16 to 29 3/4.
Columbia/HCA rose 1 3/4 to 42 and HealthTrust advanced 1 7/8 to 37 on federal regulatory approval of their proposed merger.
* Southwest Airlines jumped 2 5/8 to 21 1/2. Despite posting lower earnings due to fare wars, investors said the worst is over for the carrier.
* Bruno’s Inc. added 2 3/4 to 12. Kohlberg Kravis Roberts on Thursday offered to buy 90% of the regional grocery chain.
* Apple Computer added 1 1/2 to 39 1/8 amid continued takeover rumors. Compaq rose 1 1/8 at 36 7/8.
* Lockheed Martin lost 5/8 at 56 as the General Accounting Office recommended lowered production of its F-22 advanced fighter jet.
Overseas, London’s FTSE index of 100 leading stocks rose 25.2 points to 3,199.9. In Tokyo, the 225-share Nikkei average jumped 325.18 points to close at 16,968.24.
Mexico City stock prices rallied on optimism over a stronger peso and good earnings from heavyweight phone company Telmex. The main IPC share index of 37 leading shares closed up 88.90 points at 1,919.42, above a key psychological barrier of 1,900 points.
In currency markets, the dollar fell as a two-day rally fizzled ahead of a meeting of the Group of Seven wealthy industrialized nations next week. The dollar also came under pressure because the German mark was sought by investors in Europe ahead of Sunday’s political elections in France and Italy.
In late New York trading, the dollar traded at 1.3694 marks, down from 1.3837 marks late Thursday. The dollar also fetched 82.70 Japanese yen, down from 83.11 late Thursday.
The yield on the Treasury’s main 30-year bond declined to 7.33% from 7.34% late Thursday.
Action in commodity markets focused on cotton as prices surged to new highs, and analysts said tight supplies may drive prices higher next week. Cotton for May delivery closed up the daily two-cent a pound limit at 115.50 cents a pound, a new contract high, on the New York Cotton Exchange.
Crude oil prices rose, with the June contract adding 22 cents to $20.41 a barrel on the New York Mercantile Exchange.
