Stocks Again Set Records, Despite Earnings Warnings
Stocks resumed their record-setting march Tuesday, quickly brushing off a series of profit warnings by leading technology companies that threatened to derail Wall Street’s two-month rally.
The Dow Jones industrial average rose 75.98 points to 8,643.12, easily topping the previous record of 8,584.83 set a week earlier and extending this year’s advance to 9.3%.
Broader stock indicators also bounced back from Monday’s downturn, which produced only marginal damage outside the technology group.
The Standard & Poor’s 500 and the New York Stock Exchange composite index both reached new highs, while the technology-heavy Nasdaq composite index recovered most of Monday’s 1.6% loss.
The yield on the 30-year Treasury bond stayed under the key 6% level, closing at 5.95%, just below Monday’s 5.96%.
The Dow has risen more than 1,000 points, or 14%, since plunging 220 points on Jan. 9 amid concerns about how much U.S. companies are being hurt by the economic crisis in Asia.
“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,” said Dickey, referring to last week’s three-day string of unnerving announcements from Intel, Motorola and Compaq Computer. “There doesn’t seem to be any good news at all. The only good news is that stocks are pretty much trending higher.”
Although technology shares posted some sizable gains, they weren’t as prominent in Tuesday’s rebound as they were in Monday’s slide.
Positive comments from brokerage Salomon Smith Barney helped Sun Microsystems rebound $4.66 to $42.44. Part of Compaq’s earnings woes were due to Sun’s success, the brokerage said.
Advancing issues outnumbered decliners by nearly a 2-1 margin on the New York Stock Exchange, where volume totaled a brisk 631.57 million shares, up from 624.70 million Monday.
The S&P; 500 rose 11.94 points to 1,064.25, and the NYSE composite rose 5.56 points to 555.00, topping Friday’s closing records by both measures.
The Nasdaq composite index, which lost 28 points Monday, rose 23.35 to 1,748.51. Among the Nasdaq leaders, Dell Computer regained only a portion of Monday’s 6-point loss, rising $2.06 to $65.19, but Sun Microsystems’ rise nearly erased Monday’s 5-point drop.
The Russell 2,000 index of smaller companies rose 3.50 points to 464.62, less than a point from its Oct. 13 record of 465.21. The small-company-dominated American Stock Exchange composite index rose 3.38 points to 712.69.
Among Tuesday’s highlights:
* IBM rose $1.38 to $97.50 and Hewlett-Packard rose $1.25 to $61.50, but the strongest Dow components were Travelers Group, up $2.25 to $57.75; Merck, up 2.13 to $130.81; and Alcoa, up $1.81 to $73.25.
* AT&T;, which won a five-year, $750-million contract from Citicorp to streamline the bank’s computer operations, rose $1.44 to $62.69.
* Oil producers won back some of their heavy losses after brokerage house PaineWebber upgraded four producers, including Texaco, which gained $2.56 to $58.41.
Crude oil was steadier, closing 7 cents lower at $14.26 a barrel on the New York Mercantile Exchange, a day after plummeting 71-cent to four-year lows on news that Saudi Arabia would not cut output to boost prices.
Overseas, Tokyo’s Nikkei stock average rose 0.1%, Frankfurt’s DAX index rose 1.1% and London’s FTSE-100 rose 0.2%.
