Stocks Rally on Day of Records; Yields Slip
Stocks rallied Tuesday, with major indexes reaching records--again--as long-term interest rates fell on weak consumer spending data and investors expected favorable corporate earnings reports next week.
The Dow Jones industrial average ended up 78.09 points at 8,178.31, as it approached its Aug. 6 record of 8,259.31.
Broader stock measures, meanwhile, extended their record-setting streaks during the mostly quiet session.
The Nasdaq composite index set its fourth straight high, with a gain of 15.36 points at 1,737.27. The Standard & Poor’s composite index of 500 stocks rose 10.43 points to a record 983.12. The Russell 2000 Index, a barometer of small-name stocks, jumped 2.08 points to 463.78, its seventh closing high in a row.
Indeed, investors were again in a buying mood as recent concerns about inflation, interest-rate hikes by the Federal Reserve Board and Southeast Asian currency tensions faded into the background, analysts said.
In the broader market, advancing issues led declines 5 to 4 in heavy trading on the New York Stock Exchange.
The bond market continued to cooperate, as the price of the benchmark 30-year Treasury bond advanced, lowering its yield to 6.23% from 6.26% at Monday’s close. Bond prices and yields move in opposite directions.
Among Tuesday’s highlights:
* The Dow’s biggest gainer was 3M, up $2.88 to $98.88, followed by several popular blue-chips that have struggled since early August: Disney rose $2.19 to $85.19, General Electric rose $2.13 to $72, IBM rose $2 to $106.81, and Procter & Gamble rose $1.88 to $73.88.
AT&T; was also a major gainer, climbing $1.50 to $45.44 after reports that it may be discussing a merger with GTE. Both telephone companies declined to comment. GTE rose $1.63 to $50.63.
* Investors were heartened by late Monday’s news that Motorola had met most analyst forecasts, which had been lowered recently at the company’s suggestion. The profit picture was also bolstered by a generally strong report by Tellabs, a maker of telecommunications equipment. Motorola rose $2.19 to $73.19, and Tellabs rose $2.13 to $57.25.
Other technology issues gaining included Intel, up $1.75 to $95.25; Microsoft, up $1.44 to $136.56; Texas Instruments, up $2.44 to $132.88; PeopleSoft, up $2.38 to $57.75; and Lucent Technologies, up $2.75 to $88.81.
* Drug shares advanced amid optimism that newly approved drugs will bolster companies’ bottom lines.
Schering-Plough climbed $2.38 to $56.88, Pfizer rose $2.25 to $65, Eli Lilly gained $4.38 to $131.63 and Merck rose $1.31 to $102.44.
* The stock market wasn’t without its share of laggards. J.P. Morgan fell $1.44 to $120.38 after setting plans to sell as much as $1.2 billion preferred stock and other securities.
Reader’s Digest Assn. dropped $2.94 to $28.13 after the company said it expects a fiscal first-quarter loss because of weaker-than-expected sales caused in part by a strong dollar.
And ETrade Group tumbled $5.31 to $34 on concern that profit will slide as competition heats up with rival online securities trading firms.
In currency trading, the dollar eased against the mark as a deepening political crisis over Italy’s 1998 budget boosted the German currency against the lira.
The dollar fell to a three-month low, under 1.7450 marks, as the mark’s exchange rate against the Italian lira rose to 984 lira per mark, its highest since mid-June. The dollar fetched 1.7575 marks late in New York, down from 1.7585 late Monday.
But the dollar rose to 122.56 Japanese yen from 122.0.
Overseas, Mexican stocks rose as investors looked forward to strong third-quarter results.
Mexico City’s Bolsa index rose 44.71 points, or 0.84%, to 5,360.67.
Fund managers bought shares late in the day on expectations company earnings will come in “much better” than expected, said Iker Laresgoite, head trader with InverMexico Casa de Bolsa.
Elsewhere, Tokyo’s Nikkei stock average fell 1.8%, Frankfurt’s DAX index rose 0.1% and London’s FTSE-100 rose 0.1%.
