Dow Gains 97 as ‘Cyclicals’ Lead Advance
Basic-industry stocks surged Tuesday, leading another powerful advance on Wall Street.
The Dow Jones industrial average leaped 97.90 points, or 1.1%, to a record 9,110.20, the first close above the 9,100 mark.
The broad market also fared well, with the Standard & Poor’s 500 index up 0.6% to 1,115.75 and the Nasdaq composite gaining 1% to 1,843.03. Both remain below their recent record highs, however.
Winners topped losers by 19 to 11 on the Big Board.
Analysts said investors flocked to so-called cyclical issues, such as basic-industry and commodity companies, on optimism that the U.S. economic expansion will continue at a healthy pace. Cyclical companies’ earnings tend to rise and fall with the economy.
Some individual earnings reports, and earnings projections, helped the group.
Meanwhile, the bond market cooperated, as yields eased slightly on news that the key consumer inflation index was flat in March.
Elsewhere, in currency trading the dollar fell again versus the Japanese yen on rumors that the Group of Seven industrial nations, meeting today, will issue a statement favoring a stronger yen.
The dollar declined 0.05 yen to 129.55. It also fell to a six-week low against the German mark.
As for the stock market, some analysts said worries about first-quarter corporate earnings have become overblown in recent weeks. Now, “since expectations are low, you can come out with earnings that are OK and we see a rally in the market,” said Alan Skrainka, chief market strategist at Edward Jones in St. Louis.
Analysts also said the market is being helped by heavy cash flows into retirement accounts ahead of today’s tax deadline.
Among Tuesday’s highlights:
* Eastman Kodak surged $3.81 to $70.81 as the company’s depressed earnings report appeared to leave investors betting that the worst is over for the troubled firm.
Among other industrial issues, Alcoa soared $4.69 to $76. One analyst, in a published report, said Alcoa could earn $10.50 to $11 a share in 1999, compared with an expected $5.24 a share this year.
Paper stocks also rocketed, with International Paper up $3.38 to $54.38 and Weyerhaeuser up $4.44 to $61.81. Both companies reported higher earnings, and Goldman, Sachs & Co. issued a bullish report on the paper industry.
* Other industrial winners included PPG Industries, up $1.75 to $70.25; Arco Chemical, up $6 to $54.50; and Reliance Steel, up $1.38 to $39.88.
* The tech sector was paced by another surge in many Internet-related issues. Merrill Lynch expressed confidence in the group’s long-term prospects.
Among Internet search vehicles, Excite soared $7.13 to $76, Yahoo rose $1.88 to $114.88, Infoseek jumped $4.06 to $25.63 and Lycos gained $3.13 to $68.63.
* Financial stocks were mixed, as investors continued to digest recent news of blockbuster merger deals. BankAmerica added 31 cents to $91.44 and NationsBank added 13 cents to $80.75 one day after sealing their deal.
Among rumored targets, Wells Fargo gained $3.06 to $374, but Chase Manhattan fell $3.63 to $142.75. Among smaller California lenders, Bay View Capital rose $3.25 to $38, Bank of Commerce jumped $1.19 to $22.13 and Santa Barbara Bancorp gained $1.13 to $55.75.
Market Roundup, D10
* EARNINGS ARE IN: Intel, Kodak and others report on their first quarter. D2-3
