IBM, Internet Firms Help Set New Highs

A decent profit report from IBM and a gold rush for Internet-related shares boosted the stock market to another day of record highs Tuesday. Bond prices fell for a second day.

The Dow Jones industrial average rose 43.10 points to 9,184.94, topping Friday’s record close of 9,167.50. The blue-chip barometer, which had slipped 25 points Monday, opened the day with a 43-point loss before reversing course.

Broad-market measures also set new records, including a third straight day of closing highs for the Standard & Poor’s 500 and the technology-heavy Nasdaq composite index.

IBM, which posted its latest results at Monday’s close, jumped $6.81--or the equivalent of 27 Dow points--to an all-time best $118.

The computer giant, hurt by PC price wars and the continuing economic turmoil in Asia, suffered a 13% drop in profit compared with a year ago. But just like last week’s reports from Intel and Compaq Computer, the results exceeded the reduced expectations of most analysts, who had been duly warned by all three companies in advance.

“People are trying to say that earnings are beating expectations, but it’s ‘recently revised downward’ numbers they’re beating,” said Henry Herrmann, chief investment officer at Waddell & Reed of Overland Park, Kan. “It looks as if revenues are a tad better than expected, so that’s encouraging.”

Comments by Federal Reserve Board Gov. Roger Ferguson that the central bank will have to raise interest rates unless the effects of Asia’s crisis slows had little impact on U.S. equities. And there was no new economic data for investors to chew on.

But most Asian markets ended lower, as traders reacted glumly to a rate hike in Indonesia aimed at laying the groundwork for economic reforms and boosting the rupiah currency.

Hong Kong shares fell 1.64% in thin trade, while stocks in Kuala Lumpur lost more than 2%.

But the region’s currencies performed better, gaining as the dollar slipped back against the Japanese yen and the mark.

The main Jakarta index shed more than 2% after Indonesia’s central bank raised its key interest rates by an average of 4.1 percentage points. The rupiah hardly budged, with analysts citing disappointment at the extent of the rise.

In the U.S. bond market, bond prices fell for a second day as Ford Motor Credit Co. and Computer Associates International Inc. led sales of nearly $6 billion of bonds, and as other companies planned $6.5 billion more in coming days.

Investor demand was so strong for the Ford Motor Co. unit that it boosted its sale by 30%, to $3.25 billion, making it the biggest-ever bond sale by Ford. Computer Associates, an Islandia, N.Y.-based software maker, increased its sale by 9% to $1.75 billion.

“There’s really good demand out there for corporate paper,” said Andrew Palmer of ASB Capital Management in Washington.

The price of the benchmark 30-year Treasury bond, meantime, dropped, pushing its yield up 3 basis points to 5.95%--the highest yield in three weeks. On Monday, it stood at 5.93%.

Advancing issues outnumbered decliners by an 8-to-7 margin on the New York Stock Exchange, where volume totaled 675.76 million shares, up sharply from Monday’s 597.53 million.

The S&P; 500 rose 3.02 to 1,126.67, and the NYSE composite index rose 0.79 to a record 584.80.

The Nasdaq composite index rose 16.73 to 1,903.87, its first foray above 1,900.

The Russell 2000 index of smaller companies rose 2.60 to 491.41.

Among Tuesday’s highlights:

* IBM’s results helped spur big gains among bellwether issues such as Intel, up $2.44 to $78.94, and Dell Computer, up $4.69 to $74.38. But it was the sudden obsession with any company doing any Internet-related business that was most notable about Tuesday’s advance.

* Pfizer rose for a fourth day, climbing $2.81 to $116.19, on optimism that its new impotence pill, Viagra, will be a bestseller. Pfizer soared almost 8% Monday. With a stock market value of almost $151 billion, Pfizer is now the largest U.S. drug company, ahead of Merck, which fell $2.13 at $120.13.

American depositary receipts of SmithKline Beecham fell $2.75 to $58.13, after the pharmaceutical company reported earnings of 42.9 cents, below the average estimate of 47 cents a share.

* A rise in gold prices lifted mining stocks. Newmont Mining, North America’s largest gold miner, jumped $2 to $33.38. Gold for June delivery rose $3.30 an ounce to $311.20 in New York.

* Oil field service and equipment stocks soared as investors sought companies with good earnings prospects, which have lagged the market’s gains. Schlumberger rallied $3.69 to $80.63, Smith International gained $3.50 to $60.69 and Cooper Cameron rose $2.75 to $65.19.

In currency trading, the dollar fell to a 2 1/2-month low against the German mark on signs Germany’s economy may be growing fast enough for the Bundesbank to raise interest rates.

A bigger-than-expected gain in money supply, a key measure of future inflation in Germany, fueled concern the central bank may raise borrowing costs to keep prices in check.

“Europe is picking up. We’re starting to see signs of stronger growth in Germany,” Greg Krenzer of Van Eck Associates Corp. said. “We’re starting to get more bullish on the mark.”

In late New York trading, the dollar fell to 1.7889 marks, it’s lowest since Feb. 6, from 1.8010 marks Monday. It slumped to 131.35 yen from 132.15 yen on concern the Bank of Japan would sell dollars to boost the yen.

Higher German interest rates would make mark deposits and bonds more alluring.

That would also bring them more in line with rates in other nations hoping to join Europe’s single currency in January.