Dow Climbs to Another High; Yields Decline
Blue-chip stocks shot up nearly 100 points Tuesday to another record close and bond prices bounced back on the latest batch of good economic news and investor confidence about corporate earnings.
The dollar dropped against Japan’s yen as currency traders fretted over the meeting this week of the Group of Seven wealthiest nations.
The Dow Jones industrial average rose 97.90 points to 9,110.20, easily topping last Monday’s record of 9,033.23, which was the blue-chip barometer’s first close above 9,000. The Dow’s 1,200-point gain since the start of the year is more than double what many analysts had predicted for all of 1998.
The technology-heavy Nasdaq composite index rose sharply in advance of Intel’s latest profit report--which came after the close and was in line with Wall Street’s expectations--but most broad-market measures posted more modest gains.
Blue-chip shares rose steadily after the government reported that consumer prices were unchanged last month and the first full day of first-quarter profit reports passed without any major disasters.
“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 of St. Louis. He said analysts now see first-quarter profits improving just 0.95% over year-ago levels, down from a consensus forecast of 5% two months ago.
The latest economic data underscored the rosy economic scenario of steady growth and low inflation, analysts said.
The Labor Department said the consumer price index was unchanged in March after a 0.1% rise in February. Wall Street had expected a 0.1% rise.
The Commerce Department reported that retail sales fell 0.1% in March after a revised 0.75% rise in February. Experts had expected a 0.1% rise.
“The economic news was favorable--modest growth and no inflation,” said Harvey Hirshhorn, chief economist at SteinRoe & Farnham. “There was a shift out of consumer stocks into cyclical stocks, which pushed the Dow up tremendously.”
The price of the bellwether 30-year U.S. Treasury bond rose, pushing its yield down to 5.90% from 5.92% on Monday.
Advancing issues outnumbered decliners by a 7-4 margin on the New York Stock Exchange in brisk trading.
The Standard & Poor’s 500-stock index rose 6.06 points to 1,115.75, and the NYSE composite index rose 3.54 points to 581.31.
The Nasdaq composite index rose 18.08 points to 1,843.03. The Russell 2,000 index of smaller companies rose 5.29 points to 484.85.
Analysts also said the market was boosted by an injection of cash from investors stashing money in tax-protected retirement funds ahead of the April 15 tax deadline.
Among Tuesday’s highlights:
* Nasdaq was boosted by Internet-related issues after Merrill Lynch expressed confidence in the group’s long-term prospects.
Excite soared $7.13 to $76, Yahoo rose $1.88 to $114.88, Infoseek rose $4.06 to $25.63 and Lycos gained $3.13 to $68.63. Intel slipped 25 cents to $76 but rose in after-hours trading amid news that the chip maker plans to cut 3,000 jobs.
* So-called cyclical issues, which rise and fall with the overall economy, gained as investors shifted money out of stocks that led the market in recent years.
International Paper climbed $3.38 to $54.38 and Weyerhaeuser rose $4.44 to $61.81. Alcoa rose $4.69 to $76.
* A day after unveiling their corporate marriage to create the nation’s biggest national bank, BankAmerica rose 31 cents to $91.56 and NationsBank rose 13 cents to $80.75.
In currency markets, European traders, returning from a long holiday weekend and nervous over Wednesday’s meeting of the G-7 leaders in Washington, sold dollars, pushing the greenback down.
The dollar ended New York trading at 1.8021 German marks, down from Monday’s 1.8238 closing level. It stood at 129.55 Japanese yen, a touch below Monday’s 129.60 close.
Market Roundup, D10
* EARNINGS ARE IN: Intel, Kodak and others report on their first quarter. D2-3