Dow Gains 27 on Strong 3rd-Quarter Profit Reports
Blue-chip stocks rose Monday as strong third-quarter profits at three Wall Street firms set the stage for an upbeat corporate earnings reporting period.
The dollar was barely changed against the German mark, but climbed against the yen on news that Japan’s current account surplus rose less than expected in August.
The Dow Jones industrial average ended up 27.01 points at 8,072.22.
Most broad-market indexes also finished with slim gains after retreating from an early spurt. The Russell 2,000 index of smaller companies scraped together a tiny gain in the final minutes to close at a record high for the third straight session.
The Nasdaq composite index ended up 3.09 points at 1,742.12.
Advancing issues outnumbered decliners by an 8-to-7 margin on the New York Stock Exchange in light trading.
The Standard & Poor’s 500-stock list rose 1.12 to 968.10, and the NYSE composite index rose 0.55 to 507.40.
The Nasdaq composite index rose 3.09 to 1,742.12 after retreating from an early foray into record territory.
The Russell 2,000 rose 0.18 to 465.21, its 27th record close in 33 sessions. But the American Stock Exchange composite index, which is dominated by smaller companies, fell 0.80 to 716.57.
As expected, trading was very light with the bond market closed for the Columbus Day holiday and no new economic data to soothe or stoke the inflation jitters set off last week by Federal Reserve Board Chairman Alan Greenspan and news of a bigger-than-expected increase in wholesale prices.
“We had a little letdown Wednesday to Friday last week, but the encouraging thing was that it didn’t snowball on the downside. There were many excuses to sell off more sharply,” said Richard McCabe, chief market analyst at Merrill Lynch. “Maybe people saw the way the market held up so well” last week and decided to buy on Monday morning.
Barring some major disappointments in some high-profile profit reports due the next two days--the most notable being Intel’s today--the market may continue to trade in a narrow range until after Thursday morning’s report on consumer prices during September.
Because of Intel’s trend-setting position, its earnings are among the most eagerly awaited on Wall Street.
The stocks of J.P. Morgan, Travelers Group and Donaldson, Lufkin & Jenrette rose after all three financial services firms posted strong profits for the latest quarter.
“The financial stock earnings were the most interesting thing today,” said Bill Meehan, chief market analyst at Cantor Fitzgerald.
Meehan said the market is also rethinking its reaction to Greenspan’s comment last week that drove the market lower.
“It was overblown,” he said.
Greenspan sent the blue-chip market reeling with his comments that subdued inflation and the booming economy were unsustainable. The market is now awaiting more comments by Greenspan, who is scheduled to speak in Washington today.
Among Monday’s highlights:
* J.P. Morgan, up $1.69 to $120.38, and Travelers Group, up 81 cents to $75.31, helped lead the Dow throughout the day.
Also leading the Dow higher were two companies due to report earnings this week: General Motors rose $1.44 to $71.44, and Caterpillar rose $1.19 to $59.81.
* Mergers and acquisitions gave stocks a boost. Netcom On-Line Communications Services rallied $6.06 to $21.19 after ICG Communications said it will buy the Internet access company for $283.5 million in stock. ICG fell $1.06 to $25.19.
Greenfield Industries surged $5.31 to $37.50 after Kennametal said it will buy the No. 1 drill-bit maker for about $1 billion in cash and assumed debt. Kennametal fell 88 cents to $51.56.
* The action wasn’t limited to the U.S. BAT Industries’ American depositary receipts jumped $1.81 to $20 after Zurich Insurance said it’s in talks with BAT to create a financial services company valued at $35.6 billion.
* The market had its share of laggards. Neoprobe dropped $1.75 to $12 after the company ended a marketing agreement with U.S. Surgical.
In currency trading, the dollar was quoted at 120.80 Japanese yen late Monday, up from 119.78 Friday but off a high of 121.40 reached in overnight trade. It was at 1.7505 German marks compared with 1.7507 marks on Friday.
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Market Roundup, D16
