FINANCIAL MARKETS : IBM Paces Blue Chips and Dow Up 33
Blue-chip stocks racked up big gains for a second day Tuesday as the market benefited from a rally by IBM.
The Dow Jones industrial average ended up 33.96 points at 5,671.68 after Monday’s surge of 51 points. IBM’s gain of 7 1/4 to 117 3/8 accounted for 22 points of the Dow’s advance.
In the broader market, advancing issues beat decliners 1,252 to 1,078 on active volume of 406 million shares on the New York Stock Exchange.
“Monday was mega-merger mania. Today it’s ‘Can’t get enough of IBM day’ on Wall Street,” said Marty Kearney, a trader at PTI Securities.
IBM was the star performer due to hopes that strong demand for its mainframe computers will help Big Blue deliver strong quarterly results.
Meanwhile, gasoline rose to 68.20 cents a gallon during trading--its highest price in more than four years--amid expectations record U.S. gasoline demand this summer will draw down already low inventories. It closed at 68.11 cents on the New York Mercantile Exchange.
After the close of trading in New York energy futures, the American Petroleum Institute said U.S. crude supplies fell 1.4 million barrels to a 19-year low of 297.8 million barrels last week, while gasoline stocks dropped 2.8 million barrels to 203.6 million barrels-10 million barrels below year-ago levels.
Also Tuesday, the Commerce Department said the nation’s gross domestic product expanded at a 0.5% annual rate in the three months from October through December, down from an initial estimate of 0.9% and a fraction of the third quarter’s 3.6% pace of expansion. In another report, the leading indicators for February rose 1.3%, the largest jump since January 1976.
Some analysts said they saw signs of a pickup in the months ahead.
“The Fed’s three rate cuts are beginning to have some effect and I think we’ll look through this corporate earnings period and to the next few quarters for some strength,” said Paul Rabbit, an analyst at Oppenheimer & Co.
The yield of the Treasury’s main 30-year bond fell to 6.59% from 6.64% late Monday.
Among market highlights:
* Teledyne climbed 5 1/4 to 33 1/4 on Monday’s news of a $3.2-billion merger agreement with Alleghany Ludlum, which slipped 7/8 to 18 1/8.
* Drug stocks were gainers, with Pfizer up 1 3/4 at 71 7/8, Eli Lilly up 1 to 66 3/8 and Warner Lambert up 2 5/8 to 108 3/4.
* IBM had little effect on other technology stocks. Digital Equipment rose 5/8 to 54 7/8, but Compaq eased 1/8 to 39, and Hewlett-Packard dropped 3/8 to 95 7/8. Dell Computer was unchanged at 35 5/8, and Apple Computer fell 11/32 to 25 5/32.
* Bally Entertainment rose 3 5/8 to 21 5/8 on rumors that it was in takeover talks with ITT. ITT and Bally declined comment. ITT rose 1 1/2 to 62 5/8.
* General Motors was off 1/2 at 55 5/8, retreating after leaping 2 7/8 Monday on its decision to spin off Electronic Data Systems to Class E shareholders in a tax-free stock exchange.
