Broad Market Gains; Nasdaq Sets New High
U.S. stocks rose Friday as investors shunned industries with uncertain prospects and piled into financial and consumer goods companies that are expected to report robust profits this month.
In a seesaw session, the Dow Jones industrial average gained 15.96 points, or 0.2%, to 9,105.74 after falling 60 points earlier.
“Money is moving into financials because they’re not expected to have the same earnings worries we’ve been seeing in other groups,” said Raphael Soifer, an analyst at Brown Bros. Harriman.
Most broad-market indexes also turned higher, with the Nasdaq composite index setting a new high for the third straight day. But declining issues outnumbered advancers overall.
Stocks opened higher amid news that inflation remained tame in June, but quickly turned lower amid concerns that the impending flood of company profit reports might reveal that the big rebound of recent weeks was too optimistic.
Analysts said investors were also hesitant about making big bets before Sunday’s elections in Japan.
A poor showing by Japan’s ruling Liberal Democratic Party could force Prime Minister Ryutaro Hashimoto out, throwing the country’s economic revival plans into doubt.
The election has become a referendum on Hashimoto and his handling of the recession-ravaged Japanese economy. On Friday, Tokyo’s Nikkei stock average plunged 2.2%.
Wall Street is also keeping an eye on events in Russia, which hopes to finalize financial packages with the International Monetary Fund and the World Bank this weekend to shore up its economy.
Second-quarter reporting season began this week with strong showings from big names such as General Electric and Alcoa, but the mood soured on Thursday when DuPont warned that its latest results won’t meet Wall Street forecasts.
“The market rallied recently in hopes that maybe the negative earnings news was behind us, but DuPont reminded us yesterday that negative news still exists,” A. Marshall Acuff Jr. of Salomon Smith Barney said.
The list of heavyweights set to report their results next week include Intel, J.P. Morgan, Johnson & Johnson, Ford and Kodak.
“There are worries about earnings-not so much the second quarter-but worries about the third and fourth quarter and 1999,” said Hugh Johnson, chief investment officer at First Albany Corp.
Bond prices were mostly lower. The price of the key 30-year U.S. Treasury fell, raising its yield, which moves in the opposite direction of the price, to 5.62% from 5.60% Thursday.
The Standard & Poor’s 500 rose 5.77 points to 1,164.33, about 2 points below Wednesday’s closing record of 1,166.38. For the year, the S&P; 500 is up 20%.
The technology-heavy Nasdaq composite index rose 3.22 points to a record 1,943.04, extending 1998’s gain to 23.7%.
Declining issues outnumbered advancers by a 6-5 margin on the New York Stock Exchange in moderate trading. The NYSE composite index rose 1.95 points to 592.18, about 2 points below Wednesday’s record of 594.35.
Among Friday’s highlights:
* Bank shares did the best in the S&P.; J.P. Morgan climbed $1.44 to $125.94, U.S. Bancorp gained $1 to $46.06, and Mellon Bank rose $1.50 to $74.
U.S. bank earnings are expected to grow about 12% in the second quarter from a year ago.
* The bigger-does-better trend sent Corporate America’s marquee names to records: Coca-Cola rose 50 cents to $87.19, American Express rose $2.50 to $116.81, BankAmerica gained $1.47 to $98.69 and Microsoft rallied $2.19 to $113.19.
* DuPont, down $2 to $68.13, was the Dow’s biggest decliner after tumbling $7 on Thursday. The Dow’s strongest components were American Express, up $2.50 to $116.81; Procter & Gamble, up $2.06 to $92.44; IBM, up $1.44 to $118.50; and J.P. Morgan.
* Irvine-based HomeBase gained 94 cents, or 10%, to $10 on speculation Lowe’s Cos. will buy the building-supplies retailer for $14 a share, or about $530 million. HomeBase’s stock is up 29% since Wednesday.
* Applied Materials, the world’s largest maker of semiconductor manufacturing equipment, said fiscal third-quarter results will fall below analyst forecasts, hurt by delayed orders and cutbacks in capital spending by chip makers. The company made the announcement after the close of regular U.S. trading. It rose 50 cents to $29.50 before trading was halted on the Nasdaq pending the report.
* Among individual issues, Adams Golf, a golf-club maker, rose $2.38 to $18.38 in its first day of trading.
Japan’s election also influenced currency markets, where the dollar fell modestly to 140.93 Japanese yen from 141.10 at Thursday’s close.
Market Roundup, D4
