Dow Leaps 104 as Reports Feed Blue-Chip Fever
The Dow Jones industrial average surged Tuesday to within easy striking distance of the 8,000 mark, as several corporate announcements further whetted investors’ appetite for soaring blue chips.
The Dow leaped 103.82 points, or 1.3%, to a record 7,962.31, surpassing the previous record of 7,895.81 set Thursday.
The broad market was pulled higher by the blue chips and by strength in some key technology issues. The Nasdaq composite index, heavy with tech stocks, jumped 14.36 points, or 1%, to a record 1,485.10.
Meanwhile, in other markets, Mexican stocks continued to soar, the dollar hit a 3 1/2-year high against the German mark, and gold prices edged higher after their recent plunge.
On Wall Street, the day belonged to big-name stocks--like so many other days this year. Stocks rallied early in the day, then fell back. But in late trading, two announcements spurred fresh interest in blue chips.
In one announcement, International Paper said it would undertake a major restructuring to boost profits. (Story, D3.) That sent the stock--one of the 30 Dow issues--rocketing $4.94 to $56.13, a gain of nearly 10%.
In another announcement, Procter & Gamble, also a Dow stock, said it will split its shares 2-for-1--sparking a stampede that sent the shares up $5.25 to a record $149.38.
There also was heavy buying of Motorola ahead of the company’s second-quarter earnings report, released after the market closed. The results were better than expected. (Story, D1.)
Bonds provided support for stocks, as yields hovered just above five-month lows. The 30-year Treasury bond yield inched up to 6.58% from 6.57% on Monday.
“Eight thousand [on the Dow] 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.”
Good profits from the first few companies to report only added to optimism as the earnings period gets into full swing, analysts said.
“The market psychology has obviously gone from being vulnerable and worried about every [economic] number to confidence that the earnings coming out will be positive, and that that can be translated into higher stock prices,” said Robert Freedman, chief investment officer for the John Hancock Funds in Boston.
Among Tuesday’s highlights:
* Major tech stocks rallied along with Motorola, which rose $2.13 to $82.50 ahead of its earnings report.
Compaq jumped $4.88 to $119.38, Dell Computer gained $2.63 to $127.75, IBM rose $1.25 to $95.75 and Intel jumped $2.25 to $149.63.
But Advanced Micro Devices eased 25 cents to $37.75. After the market closed, the chip maker reported lower-than-expected quarterly earnings, and the stock declined to $36.63 in after-hours trading.
* Industrial issues gaining with International Paper included paper products rival Georgia-Pacific, up $4.81 to $92.31; DuPont, up $2.38 to $65.06; and Alcoa, up $1.56 to $79.81.
Among retailers, 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.
* Real estate trust Equity Office Properties, controlled by billionaire Sam Zell, surged $5.88 to $26.88 in its first day of trading.
* Among Southland issues, Thompson PBE fell 38 cents to $4.63. But after the market closed, the firm said it retained an investment banking firm to mull ways to “maximize shareholder value.”
In other trading, Mexico’s main stock index surged 1.7% to a record 4,821.14, continuing to advance in the wake of Sunday’s elections.
The dollar rose to 1.761 German marks, up from 1.753, after Germany said its unemployment rate rose further in June.
