Dow Rises 85 as Investors Focus on Earnings, Not Iraq
Wall Street rallied Thursday as investors defied conventional wisdom by brushing aside concerns about U.S. military strikes at Iraq and an impending congressional debate on the possible impeachment of President Clinton.
The Dow Jones industrial average rose 85.22 points, or 1%, to 8,875.82, surging as the attack against Iraq entered a second day and even building on its gains after news that an impeachment vote in the House could occur as soon as Saturday.
Analysts said unexpectedly good earnings news pulled investors’ attention away from the political dramas. Financial and computer-related shares led the gains after Chase Manhattan gave an optimistic profit outlook and software firm Adobe Systems said quarterly earnings beat estimates.
Meanwhile, the dollar was little changed, while Treasury bond yields rose as economic data suggested surprising strength.
Gains in U.S. stocks followed rallies in Europe after U.S. and British attacks appeared to have done little harm to world oil flows.
“Global markets seem almost accustomed to attacks on Iraq,” said PaineWebber strategist Edward Kerschner. “Once the evidence accumulated that these military actions . . . pose no significant threat to oil flows from the region, oil prices, which initially moved higher, fell back.”
Near-term crude oil futures tumbled $1.35 a barrel to $11.03 in New York.
With oil prices down again, earnings news carried the day.
Chase stock jumped $6.38 to $69.88 after the second-largest U.S. bank said fourth-quarter earnings may exceed analysts’ estimates because of a surge in lending and profit in “derivative” securities and currency trading.
Chase said results could top $1.20 a share in the quarter, compared with analysts’ consensus estimate of $1.07.
Chase has made money in the quarter lending to companies that were snubbed by corporate bond investors after Russia’s default soured their appetite for risk. While rivals such as J.P. Morgan & Co. lost money trading their own securities, Chase reduced its investments and earned fees trading for clients, analysts said.
Meanwhile, Adobe Systems’ stock gained $5.73 to close at $43.88 amid a broad rally in tech shares after it reported sharply higher results for the quarter ended Nov. 30.
The good news from Chase and Adobe follows days of warnings from many other companies that near-term earnings will be below expectations.
Among Thursday’s highlights:
* Financial stock winners included American Express, up $5.13 to $98.63; BankAmerica, up $4.38 to $60.25; Wachovia, up $4.19 to $87.81; Citigroup, up $2.38 to $50; and Wells Fargo, up $3.38 to $38.75.
* In the high-tech sector, chip stocks were hot alongside Adobe, as investor optimism that the industry is in a new upturn continues to grow. Micron Technology leaped $6 to $52.88; Texas Instruments soared $4.56 to $83.94; and Intel rose $2.75 to $116.88.
* Buyers continued to snap up many Internet issues as well, including EBay, up $14.81 to $238.31; Inktomi, up $4.38 to $135.50; and GeoCities, up $2.94 to $36.94. But Amazon.com fell $12.25 to $276.75.
* In the retail sector, Southland-based Hot Topic plunged $8.44 to $13.56 on a disappointing sales report.
In London, the FTSE-100 index matched the Dow’s gains, rallying 1%, and Germany’s DAX index of blue-chip stocks rose 1.3%.
In commodity trading, gold futures fell $3.50 an ounce to $291.20.
The metal was hurt by speculation that other countries will follow Switzerland’s lead and move to sell a portion of their national reserves.
The National Council, Switzerland’s lower house of parliament, said the constitution should no longer require gold to be held to back the currency and voted to approve a plan to sell as much as half the country’s gold holdings, the world’s third-largest reserves.
With Thursday’s vote, “it’s not a question of if, but when” Switzerland will sell gold, said Andy Smith, an analyst at Mitsui & Co.
Market Roundup, C7
