Dow defies broad market to set record


July 22, 1993|By Bloomberg Business News

NEW YORK -- U.S. stocks finished mixed yesterday as a late round of computer-guided buy orders and better-than-expected earnings from United Technologies Corp. lifted the Dow industrials to a record closing high.

"Considering what's happening in the bond market, it's surprising the Dow is holding up as well as it is," said Dale Tills, manager of institutional equities trading at Charles Schwab. "But the rest of the market looks pretty negative."

The Dow Jones industrial average rose 10.62 to close at a record 3,555.40, squeaking past the old high of 3,554.83 set May 27. Strength in Chevron Corp. and United Technologies outweighed declines in Philip Morris Cos. and Aluminum Co. of America.

Broader market measures fell. Standard & Poor's 500 slipped 0.13 to 447.18, and the Nasdaq Combined Composite Index, depressed by a drop in Microsoft Corp., shed 1.82 to close at 700.08.

The Dow industrials were buoyed by "a mix of rebounding stocks, and stocks that reported halfway decent earnings like United Technologies," said Philip Smyth, an analyst at Birinyi Associates. "Obviously, expectations for that company were lousy."

United Technologies Corp. added $1.625, to $54.875. The aerospace, building-equipment and automobile-products company said second-quarter earnings fell to 89 cents a share from $1.03 a share. Yet the results were above analysts' mean earnings estimate of 80 cents a share, according to Zacks Investment Research. The stock gained $1.25 Tuesday.

L Chevron surged $2, to $86.50, amid a recovery in oil shares.

Computer-driven buy orders took effect just before the close, adding 4.75 points to the Dow industrials, Mr. Smyth said.

Decliners outnumbered advancers by a margin of almost 8 to 7 among common stocks on the New York Stock Exchange. Trading was active, with 278.6 million shares changing hands on the NYSE.

Stocks were lower most of the day amid a surge in long-term interest rates and lower-than-expected earnings at such leading companies as GTE Corp. and Johnson & Johnson, traders said.

The benchmark 30-year bond was down 29/32 late yesterday, to yield 6.62 percent, up 7 basis points on the day. Bond prices tumbled in the wake of comments Tuesday by Federal Reserve Chairman Alan Greenspan, who told the House Banking Committee he was "disappointed" with the rate of inflation this year.

Some investors interpreted that as a signal the Fed might raise rates soon.

"Bonds are putting pressure on stocks," said Alfred Goldman, chief technical analyst at A. G. Edwards.

Health care, tobacco, household products, and multiline insurance issues paced the decline in the Standard & Poor's 500.

Johnson & Johnson shares fell $1.625, to $38.125, after the health-care company posted a 9.5 percent increase in second-quarter earnings. Earnings per share were 75 cents, up from 68 cents a year ago, but below the mean analyst estimate of 77 cents, according to Zacks.

Philip Morris Cos. lost $1, to $47.50. The company said it would permanently reduce prices on premium cigarettes, accelerating the price war among tobacco makers.

GTE fell 62.5 cents, to $36.25. The telecommunications company said second-quarter earnings from operations rose to 51 cents a share from 45 cents a year ago. Analysts expected a profit of 52 cents, according to Zacks.

AMR Corp. rose $2.125, to $65.50, after the parent of American Airlines posted second-quarter earnings from operations of 55 cents a share, improving upon a year-ago loss of 86 cents. The results surpassed analysts' expectations of 42 cents, Zacks said.

In the over-the-counter market, Microsoft dropped $1.50, to $79. The software maker's stock tumbled after an analyst at SoundView Financial Group cut his fiscal 1994 earnings estimate on concern about price cuts in the European application software market.

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