Tech Rally Helps Stocks to Third Win
Stocks extended their winning streak into a third straight session Tuesday, with the Nasdaq composite index closing at a record high on solid first-quarter earnings reports, especially among technology companies.
The Dow Jones industrial average ended up 27.10 points at 5,620.02, after gaining 60 points Monday and 46 Friday.
In the broader market, advancing issues led declines 1,309 to 1,020 on active volume of 451 million shares on the New York Stock Exchange.
The Nasdaq index ended up 14.48 points at a record 1,124.92, beating the old high of 1,118.21 reached on April 4. The index has set 11 record highs so far this year.
“The combination of decent earnings and a better bond market have given equities something to cheer about,” said Douglas Cliggott, senior investment strategist at Merrill Lynch.
Analysts said the stock market’s tone was helped by a rally in technology stocks as Intel and Sun Microsystems reported stronger-than-expected quarterly results after Monday’s close.
Intel surged 4 5/16 to 64 7/8 and Sun Micro added 1 7/16 to 50 3/4.
“It’s a pretty convincing picture developing that earnings reports are better than what the street was expecting overall,” said Thom Brown, a managing director at Rutherford Brown & Catherwood.
IBM is to report its first-quarter results on Wednesday. Wall Street expects the giant computer maker to post strong operating earnings. IBM added 1 3/4 to 115 3/4.
The bond market was fairly stable Tuesday, with the yield of the Treasury’s main 30-year bond rising to 6.79% from 6.78% late Monday.
Bond traders had mixed news. The government reported an increase in industrial production last month, excluding the effects of the General Motors strike. Evidence of economic strength tends to weaken bond prices. But there was also a sharp drop in corn, oils and metals in commodities markets.
Among market highlights:
* Paper stocks surged despite some dismal first-quarter results as investors looked ahead to improving industry prospects. Merrill Lynch and Morgan Stanley upgraded the group.
International Paper rose 1 1/4 to 41 1/8. Champion International gained 2 7/8 to 49 7/8, Boise Cascade climbed 3 1/2 to 46, Willamette surged 4 1/4 to 64 1/4, Weyerhaeuser added 1 5/8 to 48 7/8 and Georgia-Pacific was up 2 5/8 to 74 5/8.
* Positive earnings surprises included Eastman Kodak, Johnson & Johnson and Chrysler. Kodak surged 3 1/4 to 73, J&J; rose 1 3/8 to 91 1/8 and Chrysler added 1/2 to 62 5/8.
Also reporting better-than-expected quarterly results were Sprint, which rose 1 1/4 to 39 1/2, and Hilton Hotels, up 7 1/8 to 102 3/4.
* Informix’s first-quarter results hit the high end of Wall Street’s estimate and its stock rose 4 5/8 to 24.
* Caterpillar lost 1 3/8 to 70 1/2 after it posted lower profits for the first quarter, and analysts said they were concerned about the earthmoving and construction equipment maker’s outlook for the rest of 1996.
* Among major U.S. banks reporting, Citicorp fell 1/2 to 77, despite beating analysts’ consensus, and Chase Manhattan was unchanged at 69. Analysts cited profit-taking after the group’s recent bounce.
* Nellcor Puritan sank 13 1/2 to 50 1/2 on disappointing results.
On the commodity markets, petroleum and grain prices dropped sharply as the markets retreated from their recent lofty levels on profit-taking and concerns about a possible return of Iraq to world oil markets.
Cattle prices ended lower partly due to worries-sparked by Oprah Winfrey’s television show about consumer health concerns over beef and mad cow disease.
Live cattle futures on the Chicago Mercantile Exchange were sharply lower. The contract for April delivery closed down the 1.50-cent limit down at 58.925 cents a pound.
Winfrey’s show featured panelists discussing health concerns about eating beef and mad cow disease, which has been linked in Britain to a fatal human brain disease and the possibility that it might occur in the United States.
The show “was negative and some people are concerned because of the number of homemakers who are at home and listening and watching Oprah,” said Chuck Levitt, an analyst with Alaron Trading Corp.
One of the participants, Gary Weber, director of beef safety and cattle health for the National Cattlemen’s Beef Assn., also was concerned about its impact.
“The bottom line is it will affect some people’s purchasing decisions,” he said. “I think it’s going to make them [consumers] ask a number of questions, but the fact remains that we don’t have [mad cow] disease here.”
On the New York Mercantile Exchange, crude oil for May delivery ended down 59 cents at $24.47 a barrel.
