Earnings Help Boost Stocks; Grains Plunge
Wall Street extended its winning streak Tuesday, as some strong first-quarter corporate earnings reports boosted stocks for a third session.
Meanwhile, bond yields closed up slightly, while grain and energy prices plummeted in a major commodity-market sell-off.
In the stock market the Dow Jones industrial average rose 27.10 points to 5,620.02, bringing its gain over the past three sessions to 133 points and putting the blue-chip index withing striking distance of its record 5,689.74 set on April 3.
Winners topped losers by 13 to 10 on the Big Board in active trading.
Meanwhile, two key small-stock indexes--the Nasdaq composite and the Russell 2,000--both set new highs on Tuesday, as small-company stocks continue to steal the spotlight away from blue chips.
The Nasdaq composite jumped 14.48 points, or 1.3%, to a record 1,124.92, topping the previous high of 1,118.21 reached on April 4.
The Russell 2,000 gained 0.6% to a record 335.57.
“The combination of decent earnings [reports] and a better bond market have given equities something to cheer about,” said Douglas Cliggott, senior investment strategist at Merrill Lynch.
Indeed, computer chip giant Intel shot up 4 5/16 to 64 7/8 in the wake of a healthier-than-expected first-quarter report issued late Monday. That helped spark a broad rally in technology issues.
“It’s a pretty convincing picture developing that earnings reports are better than what [Wall Street] was expecting overall,” said Thom Brown, a managing director at Rutherford Brown & Catherwood.
IBM is to report its first-quarter results today. Its shares added 1 3/8 to 115 1/2 Tuesday.
Investors are anxious to see strong corporate profit reports because the recent rise in interest rates has lessened stocks’ appeal relative to bonds, experts note.
On Tuesday the bond market suffered a mild sell-off early in the day, but by the close yields were up only marginally. The 30-year Treasury bond ended at 6.79%, down from 6.78% Monday.
Still, some analysts were disappointed that bond investors didn’t react more favorably to a plunge in grain and oil prices. The Commodity Research Bureau index of key commodity futures, which recently hit an 8-year high, dove 1.3% to 255.84 in heavy profit-taking.
Wheat futures on the Chicago Board of Trade fell the 20-cent-per-bushel limit in a speculative sell-off tied to profit-taking and forecasts for better Midwest weather, traders said. Corn futures also plummeted.
Meanwhile, oil prices tumbled as OPEC President Amar Makhloufi and OPEC Secretary-General Rilwanu Lukman arrived in Baghdad for the first visit to Iraq by senior OPEC officials since its invasion of Kuwait in 1990.
Iraq and the United Nations are negotiating a resumption of Iraqi oil exports.
Among Tuesday’s Wall Street highlights:
* Earnings reports boosted Eastman Kodak 3 1/4 to 73; Johnson & Johnson 1 3/8 to 91 1/8; Chrysler 3/8 to 62 1/2; Sprint 1 1/4 to 39 1/2; Hilton Hotels 7 1/8 to 102 3/4; Mattel 7/8 to 25 5/8; and Sun Microsystems 1 7/16 to 50 3/4.
But Caterpillar lost 1 1/8 to 70 1/2 after reporting lower earnings. Among banks, Citicorp fell 1/2 to 77 despite beating analysts’ consensus earnings estimate.
* 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, and Weyerhaeuser’s chief executive said the recent downtrend in some paper prices is nearing an end.
Weyerhaeuser rose 1 5/8 to 48 7/8, 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, and Georgia-Pacific was up 2 5/8 to 74 5/8.
In foreign trading, Mexican shares eased slightly, as did Tokyo shares. But Toronto’s key index hit a record high.
In currency trading the dollar slipped after a Japanese central bank official apparently hinted that Japanese interest rates will soon be heading higher.
In late trading, the dollar retreated to 108.21 yen in New York from 108.58 Monday, and to 1.5097 German marks from 1.5130.
In Chicago, 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.
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.
