Stocks Rise as Greenspan Again Gives Upbeat News
Stocks rose modestly Wednesday, lifting some measures to new highs, as Alan Greenspan again chose not to play spoiler to the market’s upbeat outlook on inflation and interest rates.
The Dow Jones industrial average rose 26.71 points to 8,088.36, padding Tuesday’s record close. The blue-chip barometer started the day with an 81-point gain, breaking through the 8,100-point barrier for the first time, but quickly succumbed to a round of profit taking. It briefly dipped into negative territory before turning higher again.
Broad-market indicators also pushed higher after retreating from what initially looked to be a continuation of Tuesday afternoon’s rally.
“The market’s path of least resistance is still higher, but it was a more thoughtful, critical [advance] than yesterday’s unanimous celebration of what [Greenspan] was saying,” said Richard E. Cripps, chief market strategist for Legg Mason of Baltimore.
The Dow gained nearly 155 points on Tuesday after Greenspan, chairman of the Federal Reserve Board, delivered an upbeat midyear report to a House subcommittee without dropping any suggestion of an impending boost in interest rates to slow the economy and protect against inflation.
On Wednesday, Greenspan gave a repeat performance before a Senate panel, reinforcing hopes that Aug. 19’s Fed meeting won’t produce any increase in interest rates. Fed officials nudged a key lending rate higher in late March, but passed on the chance to act again at two subsequent meetings, cheering investors worried about slower profit growth.
Long-term bond yields rose slightly, with the yield on the benchmark 30-year Treasury bond rising to 6.43% from 6.41% late Tuesday. Yields had sunk on Tuesday to their lowest levels in nearly eight months after Greenspan’s remarks eased concern about rising rates.
Among Wednesday’s highlights:
* Some stocks were boosted by encouraging reports on second-quarter earnings. Among the Dow industrials, DuPont, AlliedSignal, United Technologies and Chevron all met or beat Wall Street forecasts. But while DuPont rose $1.44 to $67.63 and AlliedSignal rose $1.06 to $92.25, Chevron slipped 81 cents to $76.81, and United Technologies fell 38 cents to $85.88.
* Boeing rose $2.69 to $59.06 on news that the European Union endorsed the main points of the plane maker’s proposed $15-billion acquisition of McDonnell Douglas.
* Columbia/HCA added $3.25 at $36.31, and Tenet gained $2.75 at $30.25 following a report that Columbia/HCA is talking with Tenet about a possible merger.
* Qualcomm lost $3.75 at $47.88 as the telecommunications equipment company beat expectations with its third-quarter profit report, but analysts expressed concerns about the current quarter and a transition to new products.
* Computer Associates surged $5.25 to $69.56 as the software maker’s profit improved a better-than-than expected 30% for its first quarter ended June 30.
Advancing issues outnumbered decliners by a 3-to-2 margin on the New York Stock Exchange. The Standard & Poor’s 500-stock list rose 2.58 to 936.56, just 0.03 shy of July 16’s record finish. The Nasdaq composite index rose 3.79 to 1,567.65.
Overseas, Tokyo’s Nikkei stock average fell 0.1%, and London’s FTSE 100 rose 0.6%.
The dollar hit another six-year high against the mark and rose in most other dealings Wednesday after top officials from the Bundesbank and Federal Reserve signaled that they don’t oppose the U.S. currency’s latest ascent.
