FINANCIAL MARKETS : Blue Chips Hit Record High as Dollar Rallies Against the Yen

Blue-chip stocks hit a record high for the second day in a row Wednesday on more signs of mild inflation, and the dollar surged to a 15-month high against the Japanese yen.

Bonds edged lower as investors took profits from this week’s rally.

The Dow Jones industrial average ended up 18.31 points at 4,765.52, improving on Tuesday’s record close of 4,747.21. In the broader market, advancing issues led decliners 1,160 to 1,079 on active volume of 381 million shares on the New York Stock Exchange.

The Nasdaq Composite index reached its sixth record high in the past seven sessions, rising 2.40 points to end at 1,067.40 amid a revival in technology stocks.

The Standard & Poor’s 500 and NYSE indexes also set new highs.

The blue-chip market’s leap into record territory came despite a plunge in the shares of International Business Machines after the company said some customer orders for mainframe computers had been delayed because a component supplier cannot keep up with demand.

IBM shares closed down 2 7/8 at 94 5/8. Analysts said the delay will shift the booking of $250 million in revenue to the fourth quarter from the third. IBM said the supplier should be able to meet demand by the end of the fourth quarter.

Salomon Bros. lowered its third-quarter earnings estimate for IBM by 10 cents a share to $2.30, but raised its fourth-quarter expectation by 10 cents to $3.67 per share. Analysts had expected an average profit of $2.55 a share before the announcement.

“Weakness in IBM impacted the Dow, but in essence the market’s momentum of late has caused some bears to become reluctant bulls,” said Alan Ackerman, a market strategist at Fahnestock & Co.

Analysts said investors were optimistic that the Federal Reserve Board will again lower interest rates in the wake of reports showing inflation is well under control. The Fed last lowered rates in July, in the first cut in nearly three years.

Among Wednesday’s highlights:

* The 30 Dow industrial components were led higher by Eastman Kodak, which gained 2 5/8 to 62 3/4. It was followed by Procter & Gamble, up 1 5/8 to 73 1/4; J.P. Morgan, up 1 3/8 to 76 1/8, and Coca-Cola, up 1 1/4 to 76 1/8.

Companies that sell consumer products such as soap, cigarettes, cosmetics and film usually prosper in hard economic times, as consumers generally will continue to buy those items even in a recession.

* Economically sensitive issues, those that react sharply to changes in the economy, brought up the rear. Alcoa fell 1 1/8 to 58 5/8, and General Motors lost 3/4 to 47.

For the second straight session, the dollar reached a new peak against the yen, propelled by Japanese central bank intervention and purchases of U.S. Treasury securities by Japanese funds.

On Tuesday, the dollar crashed through the 1995 high set in January. In late New York trading, it rose to 102.75 yen from 101.10 yen on Tuesday. That was its highest level since hitting 103.72 yen on June 17, 1994.

The Bank of Japan “intervened heavily again overnight, and it is widely believed they were intervening aggressively in the last few sessions,” said Bob Lynch, analyst at MMS International. “That was a significant factor in the dollar’s rally.”

In the bond market, the yield of the benchmark 30-year Treasury bond rose to 6.52% from 6.50% late Tuesday.

In commodities, Tropical Storm Marilyn, which may become a hurricane as it churns west through the Atlantic, set off a rally in orange juice and natural gas prices.

November orange juice jumped 2.7 cents to 114.4 cents a pound at the New York Cotton Exchange, and the September contract rose 3.30 cents to 115.00 cents.

October natural gas rose 6.7 cents to $1.72 per 1,000 cubic feet.

Heating oil prices fell in response to a weekly increase in domestic stocks. Heating oil for October ended down 0.70 cent at 51.25 cents a gallon.

October crude declined 10 cents to $18.54 a barrel, and October gasoline lost 0.40 cent to 55.34 cents a gallon.

In overseas trading, the German stock market hit a record high, buoyed by the dollar’s recovery, which has given new hope to beleaguered German companies hurt by the recent strength of the mark. The 30-share DAX index ended 24.65 points higher at 2,295.48.

London’s FTSE-100 index rose 34.9 points to a record closing of 3,570.8.

In Tokyo, active buying of construction and steel issues helped propel the 225-share Nikkei average up 142.09 points to close at 18,614.26.

In Mexico, the Bolsa index fell 16.78 points to 2,587.07.