Dow Up 16 as Buyers Turn Again to Big Names

Blue-chip stocks shook off early selling pressure and ended at record highs for the second time in three days Wednesday, as investors continued to cotton to big-name issues.

The Dow Jones industrial average rose 16.03 points to 6,020.81, its 29th record this year, surpassing the previous high of 6,010.00 set on Monday.

The Standard & Poor’s 500-stock index, another blue-chip measure, edged up 1.84 points to 704.41, also a record high.

In the broad market, however, stocks were mostly lower in the midst of another barrage of third-quarter corporate earnings reports. Losers topped winners by 22 to 17 on the Nasdaq market and by a slight margin on the New York Stock Exchange.

The Dow, too, had traded lower for much of the day as bond yields rose and rumors about a Russian coup surfaced. But the 30-stock index rallied late in the day.

Investors’ continued preference for big-name stocks--viewed as “safer” securities than smaller stocks--is reflected in the Dow’s 17.7% year-to-date gain. In contrast, the Russell 2,000 index of smaller stocks is up 10.3% this year.

Profit-taking in some technology issues helped depress the smaller-stock universe Wednesday. Sun Microsystems, a major computer workstation maker, tumbled 6 7/8 to 63 1/8 despite reporting third-quarter earnings up 45% and above analysts’ expectations. Sun’s stock has already more than doubled this year.

“We had a big run in tech stocks, and it looks like [some] investors are turning risk-averse,” said Michael Metz, Oppenheimer & Co.’s chief investment strategist.

Even so, the technology-heavy Nasdaq composite index eased just 7.11 points to 1,250.99.

The stock market got a modest scare early in the day as bond yields jumped. Traders said the rise in rates stemmed partly from disappointment that the September consumer inflation figure reported Wednesday wasn’t lower, and from worries about fresh data showing a larger-than-expected rise in August and September real earnings of U.S. workers.

Concern about accelerating wage inflation has rattled the bond market all year because that would suggest underlying strength in the economy.

The bellwether 30-year Treasury bond yield jumped to 6.90% by midday Wednesday from 6.84% on Tuesday. But by the end of trading, the yield had drifted down to 6.85%.

Many traders were focused solely on corporate earnings news, as reporting of third-quarter results kicks into high gear.

“We’ve been in a schizophrenic market this year,” said Kathleen McCarragher, a money manager at Weiss, Peck & Greer, which manages $13 billion. “People have been forecasting a slowdown in corporate earnings for the last year and a half, and the surprise has been that it really hasn’t occurred to the order of magnitude that one would have thought.”

Among Wednesday’s highlights:

* Big-name stocks gaining on earnings reports included Sears, up 2 to 50 1/2; Time Warner, up 1 to 41 7/8; drug giant Merck, up 3/4 to 72; and clothing maker VF Corp., up 2 7/8 to 62 5/8.

* Stocks declining on earnings news included BankAmerica, off 1 1/4 to 86 3/4; Verifone, down 7 3/8 to 33 1/2; and chemical firm B.F. Goodrich, off 1/2 to 43 1/2.

Also, some tech issues besides Sun Microsystems were hit by profit-taking despite good earnings reports. Among them, Compaq slid 1 1/8 to 73 5/8, and Computer Associates dropped 2 7/8 to 62 7/8.

* GTE’s healthy profit report drove its shares up 3 5/8 to 42 1/4 and may have helped boost other major phone stocks. Nynex surged 1 5/8 to 44 1/2, SBC Communications gained 1 3/4 to 49 1/2 and BellSouth jumped 2 1/2 to 38 7/8.

In foreign trading, Canadian stocks reversed early losses to close mixed after the Bank of Canada dropped its bank rate, which sets the pace for home and consumer loans, to 3.75%, the lowest in 33 years.

* ROSY OUTLOOK

A survey shows mutual fund investors very optimistic. D6