Philip Morris Leads Dow To New Heights
A powerful surge in shares of Philip Morris pushed the Dow Jones industrial average to another record Tuesday, while the broad market lagged.
The Dow jumped 78.50 points, or 1.1%, to 7,067.46, eclipsing the previous record of 7,022.44 set last Thursday.
Other blue-chip indexes also hit new highs. But the Nasdaq market of mostly smaller stocks was weak, as investors continued to focus on big-name stocks.
Meanwhile, in other markets, bond yields were up modestly while the dollar slumped.
On Wall Street Philip Morris rocketed 5 3/4 to a record 131 1/4 on speculation that cigarette makers will negotiate a broad settlement of pending tobacco-related litigation.
Morris’ rise, and gains in a few other blue chips, were enough to propel the Standard & Poor’s 500 index to a record with the Dow, up 7.81 points to 816.29.
That brings the S&P;’s year-to-date gain to a stunning 10.2%.
“We are seeing selected stocks that are extremely strong and that’s behind much of this late-day rally,” said Anthony O’Bryan, a market analyst at A.G. Edwards & Sons in St. Louis.
Winners topped losers by 15 to 10 on the New York Stock Exchange. But in the Nasdaq market losers had a slight edge. The Nasdaq composite index lost 1.40 points to 1,365.79.
“People are cautious,” said Peter Coolidge, senior equity trader at Brean Murray & Co. “People are buying quality. People are buying more liquid names.”
Keeping with a recent trend, the session was fairly uneventful until the final moments, when a wave of computerized program buying helped drive the Dow higher.
The day’s trading session also was marked by a spate of merger news led by H.F. Ahmanson’s surprise $6.5-billion stock offer to buy Great Western Financial. The news drove thrift stocks up sharply.
Among Tuesday’s highlights:
* In addition to Philip Morris, leading the Dow’s advance were J.P. Morgan, up 2 3/4 to 109 1/2, and Procter & Gamble, up 4 5/8 to 129 1/2.
* Tobacco stocks rising with Morris included RJR Nabisco, up 1 7/8 to 37 3/8, and Loews, up 1 to 104.
* Great Western shares soared 10 5/8 to 44 7/8 and Ahmanson jumped 4 3/8 to 44 7/8 on news of Ahmanson’s bid. Other thrift stocks gaining included Coast Savings, up 2 1/8 to 45 3/4, and Glendale Federal, up 1 7/8 to 27 1/2.
Among other financial services stocks, Merrill Lynch rocketed 4 3/8 to 101 and Dean Witter gained 1 1/8 to 43 1/2.
* The day’s other merger news included Marriott International’s agreement to acquire Renaissance Hotel Group. Marriott gained 1 to 56 1/4 and Renaissance surged 4 5/8 to 29 3/4.
Also, Horizon/CMS Healthcare rose 2 1/4 to 16 1/2 after agreeing to a stock swap acquisition by HealthSouth, whose stock fell 2 1/8 to 41.
* WMX Technologies rose 1 3/4 to 34 5/8 after Chief Executive Phillip Rooney resigned, effective immediately, amid mounting pressure from shareholders who felt the company has performed poorly under his stewardship.
* On the down side, energy stocks were broadly lower again. Unocal fell 7/8 to 41, Halliburton dropped 1 to 68 3/4 and Atlantic Richfield was off 1 3/8 to 128 1/4.
* Centennial Technologies plummeted 13 3/8 to 3 1/8 as trading in the stock finally resumed after a week’s suspension, following the company’s disclosure that its books may have been cooked. On Tuesday the firm said it defaulted on lending agreements and warned it may be unable to pay its bills.
In other markets, bond yields edged up ahead of today’s report on January consumer inflation.
The yield on the benchmark 30-year bond yield rose to 6.54% from Friday’s 6.53%. U.S. markets were closed Monday for the Presidents Day holiday.
In currency trading the dollar slid against the German mark amid concern Europe’s planned monetary union may unravel.
Signs of difficulty toward achieving the union, which includes plans for a single currency, known as the euro, help the mark, because it’s expected to remain Europe’s main currency until the euro comes about.
The dollar dropped to 1.6859 marks in New York from 1.7032 Monday in London. It was off slightly against the yen.
