Blue Chips Soar 104 Points on Profit Optimism
Blue-chip stocks powered to yet another record close Tuesday, rising more than 100 points as investors expressed confidence about the outlook for the U.S. economy and second-quarter earnings.
The dollar hit a 3 1/2-year high against the mark after news of a rise in German unemployment, and gold prices rebounded from Monday’s 12-year lows.
The 30-share Dow rose 103.82 points, or 1.32%, to 7,962.31, putting it within striking distance of the 8,000 mark. It was the 30th record this year for the world’s most widely watched stock index, whose previous record of 7,895.81 came Thursday.
“Eight thousand is a foregone conclusion at this point,” said Scott Bleier, chief investment strategist at Prime Charter Ltd. “We’ve been hemming and hawing just below 8,000, and the next time we make a move we’ll probably blast right through.”
Broad-market indicators also set new highs. Technology shares posted sizable gains for the second straight day as investors bet on strong earnings reports from that pivotal sector.
The Nasdaq composite index jumped 14.36 points to 1,485.10, its fourth consecutive record, on strength in technology stocks. The Standard & Poor’s 500 rose 6.55 points to 918.75, and the New York Stock Exchange composite index rose 2.94 points to 478.49, both records.
Advancing issues outnumbered decliners by a 3-2 margin on the NYSE in heavy trading.
In the bond markets, the benchmark 30-year Treasury was little changed, snapping a four-day rally and leaving its yield at 6.58%, just up from Monday’s 6.57%.
Meanwhile, the dollar hit a 3 1/2-year high against the mark after Germany reported a rise of 11,000 in unemployment for June.
The dollar rose to 1.7612 marks from 1.7530 on Monday. It edged up to $1.6880 British pounds from $1.6903 and ended little changed against the Japanese yen, at 112.87 yen versus 112.77 on Monday.
Gold rebounded as bargain hunters resurfaced after the precious metal fell nearly $15 an ounce in three days. August gold closed up $2 at $321.20 an ounce on New York’s Commodity Exchange, rallying from Monday’s $319 an ounce, a level last seen in 1985.
Among Tuesday’s highlights:
* The Dow drew a big boost from International Paper, which jumped $4.94 to $56.13 after announcing 9,000 layoffs. Procter & Gamble soared $5.25 to $149.38 after announcing plans to boost its dividend, split its shares and buy back as much as $1 billion worth of stock. Combined, P&G; and International Paper accounted for the equivalent of more than a third of the Dow’s gain.
* Motorola and Advanced Micro Devices rose in advance of their earnings reports, which came after the close. Motorola, up $2.13 to $82.50, posted a better-than-expected profit. But chip maker AMD failed to meet expectations and finished down 25 cents at $37.75.
Other technology stocks rallied, led by Compaq, up $4.88 to $119.38; Dell Computer, up $2.63 to $127.75; Gateway 2000, up $1.94 to $36.81; and IBM, up $1.13 to $95.63.
Intel jumped $2.25 to $149.63, Microsoft rose $1.75 to $131.25 and Computer Associates gained $1.81 to $57.94.
* Among individual issues, Talbots lost 38 cents to $29 after saying it expects to have a fiscal second-quarter loss instead of the profit forecast by analysts, and that it had reassigned its chief operating officer to a new position.
The real estate investment trust controlled by billionaire Sam Zell, Equity Office Properties Trust, surged $5.88 to $26.88 in its first day of trading.
Overseas, Tokyo’s Nikkei stock average rose 0.8%, Frankfurt’s DAX rose 0.8% and London’s FTSE-100 fell 1.1%.
