Blue Chips Hit Records Despite Earnings Worries

Wall Street’s astounding bull market run resumed Tuesday, sending blue-chip stock indexes to record highs despite last week’s earnings warnings from key technology companies.

The Dow Jones industrial average surged 75.98 points, or 0.9%, to a record 8,643.12, marking its first close above 8,600.

The broad market also was strong, including the tech sector, which rebounded from another pounding Monday related to last week’s barrage of bad news about near-term earnings.

Winners topped losers by nearly 2 to 1 on the New York Stock Exchange on Tuesday, and by 4 to 3 on Nasdaq.

First-quarter profit warnings from Intel, Motorola and Compaq Computer last week “shocked the market, but the market is very, very resilient, and people have become accustomed to buying on dips,” said Bill O’Hearn, portfolio manager at McKinley Capital Management.

Unlike in the previous two sessions, when the buying was heavily concentrated in so-called defensive market sectors such as consumer-products stocks, Tuesday’s session saw demand for a significant cross-section of stocks.

The Standard & Poor’s 500 index gained 1.1% and the New York Stock Exchange composite rose 1%, and both reached new highs.

The Dow’s close topped the previous record of 8,584.83 set a week earlier and extended this year’s spectacular advance to 9.3%.

The Nasdaq composite gained 1.4% to 1,748.51, after tumbling 1.6% on Monday. Year-to-date the index is up 11.4%, despite the recent slump in key tech stocks.

“The market keeps having lots of spears thrown at it and yet it won’t be knocked down. Instead, money continues to flow in regardless of the news backdrop,” said Bob Dickey, managing director of technical analysis at Dain Rauscher in Minneapolis.

“We have earnings warnings from some major names that should be a concern to all, and yet the market just sputters a little bit and takes off again,” Dickey said. “There doesn’t seem to be any good news at all. The only good news is that stocks are pretty much trending higher.”

Wall Street’s bulls, however, say stocks are responding to the U.S. economy’s continued strength even as inflation remains dormant, in part thanks to the latest crash in oil prices to four-year lows.

Interest rates also remain relatively subdued. The yield on the 30-year Treasury bond slipped to 5.95% on Tuesday from 5.96% on Monday. Shorter-term yields have fallen more sharply in recent sessions.

Although big stocks are leading the market this year, smaller issues are catching up: The Russell 2,000 index of smaller shares gained 0.8% to 464.62 on Tuesday, less than a point below its Oct. 13 record of 465.21. It is up 6.3% this year.

Among Tuesday’s highlights:

* The Dow’s big gainers included Alcoa, up $1.81 to $73.25; AT&T;, up $1.44 to $62.69; Goodyear, up $1.75 to $70.25; and Travelers, up $2.25 to $57.75.

* Among tech issues, positive comments from brokerage Salomon Smith Barney helped Sun Microsystems rebound $4.66 to $42.44. Among others, Intel rose 44 cents to $75.50 and Microsoft gained $1.91 to $81.50, but Motorola slipped 13 cents to $52.94 and Compaq eased 6 cents to $25.63.

* Major drug stocks continued to rocket, with Merck up $2.13 to $130.81 and Bristol-Myers Squibb up $2.25 to $107.25.

* Oil stocks rebounded after brokerage house PaineWebber upgraded four producers, including Texaco, which rose $2.56 to $58.31.

* Consolidated Cigar plunged $3.81 to $20.94 after warning of disappointing first-quarter earnings.