Profits, Asia Optimism Send Dow Up 149

The Dow industrials jumped nearly 150 points to a new high Tuesday, fueled by strong profit reports and hopes that Japan’s political upheaval will mean a swifter recovery in Asia.

The Dow Jones industrial average rose 149.33 points to close at 9,245.54, setting its first new high in two months and extending this year’s gain to 16.9%. The previous record close of 9,211.84 was set May 13.

The barometer of 30 well-known companies rose as high as 9,256.61 during the session. The highest the Dow has ever reached during trading was 9,261.91 on May 4.

Broader stock indicators also set records as J.P. Morgan surged $7.56--or the equivalent of 30 Dow points--to $133.56 after topping Wall Street forecasts with a second-quarter profit up 29% from last year’s April-June period.

The Nasdaq composite index posted its fifth consecutive record close, rising 2.88 points, or 0.15%, to 1,968.41.

The Standard & Poor’s 500 index jumped 12.39 points, or 1%, to 1,177.58, a new high.

Analysts said the rally was propelled by optimism that second-quarter corporate earnings would match expectations and hopes for steady interest rates after new economic numbers pointed to benign inflation and slowing growth.

Wall Street was also hoping that Japan’s new leader, who will replace Prime Minister Ryutaro Hashimoto in the wake of the ruling party’s severe electoral setback Sunday, will redouble efforts to put the recession-hit economy back on an even keel. A successor has not yet been named.

The stock market was smashing records because it expects strong growth in future earnings, said Peter Canelo, U.S. equity strategist at Morgan Stanley Dean Witter.

Advancing issues outnumbered decliners by a 7-5 margin on the New York Stock Exchange, where trading was heavy.

The NYSE composite index rose 6.19 points to 597.61, topping last Wednesday’s record of 594.35, and the American Stock Exchange composite index added 1.73 points to 732.20.

But after a month of stunning gains and two more weeks of second-quarter reports to digest, it was unclear whether Wall Street’s summer rally will have enough staying power for a long-awaited Dow assault on 10,000.

“It’s still early in the profit-reporting season. There could be disappointments en route,” said said A.C. Moore, chief investment strategist for Dunvegan Associates in Santa Barbara. “The profit outlook for the next quarter or two is still problematic as earnings may be impacted by the worldwide slowdown generated by the Asian debacle.”

U.S. economic data showed consumer prices and retail sales rising less than expected in June.

The consumer price index for June edged up 0.1% in both the overall and the core indexes, excluding food and energy. Forecasts had called for 0.2% rises.

New hopes that a new government in Japan may accelerate the pace of economic reforms allowed the yen to strengthen against the dollar.

In late trading, the dollar stood at 140.02 Japanese yen, down from Monday’s 141.42 close.

The dollar’s fall against the yen helped to drive U.S. bonds prices lower. The yield on the benchmark 30-year Treasury bond rose to a nearly four-year high of 5.72% from 5.69% on Monday.

Among Tuesday’s highlights:

* The Dow also drew a boost from cyclical issues considered most dependent on global economic trends: Caterpillar was up $3.25 at $55.38 and Alcoa was up $2 at $67.38.

* Johnson & Johnson rose $2.44 to $74.25 after it said second-quarter profit rose 11%. Other drug makers also gained. Merck rose $2.50 to $137.38 and Warner-Lambert gained $3.06 to $78.75, both records, after the drug makers won expanded Food and Drug Administration approval for their cholesterol-lowering drugs.

* Oil companies rallied on reports that the world’s largest producers were cutting output to boost prices.

At the New York Mercantile Exchange, crude oil for August delivery closed 64 cents higher at $14.55 a barrel.

Exxon advanced $1.56 to 72.06, Texaco gained 88 cents to $57.63 and Mobil added $2.75 to $75.38.

Overseas, Tokyo’s Nikkei stock average rose 0.8%, Frankfurt’s DAX index rose 1.0% and London’s FTSE-100 rose 2.4%.

Markets Roundup, D9