Dow hits a record broad market mixed

January 22, 1994|By Bloomberg Business News

NEW YORK -- The Dow Jones industrial average and the Nasdaq Combined Composite Index set record highs yesterday as Caterpillar Inc. and Apple Computer Inc. reported strong profits, giving further evidence of a broad economic recovery.

Caterpillar's earnings helped drive the Dow up 22.52 points, to a record high of 3,914.48. For the week, the Dow added 47.28 points, and it reached its ninth record this year.

"Earnings are still a positive" for the market as a whole, especially stocks whose performance is tied to the recovery, said Grace Messner, vice president for equities in charge of $600 million in assets at Wilmington Trust. Still, she said, there are pockets, like consumer stocks, "where it's deteriorating."

Weak telephone, paper, tobacco, electric-utilities and electrical-equipment stocks sent the broader market lower, with the Standard & Poor's 500 Index closing down 0.25, to 474.73. The S&P 500 record of 475.27 was set Jan. 10.

The American Stock Exchange Market Value Index slipped 0.11, to 484.74, after setting a record of 484.81 on Thursday.

Trading was volatile in the final hour of trading as individual-stock options and stock-index options expired.

The Dow also got a boost from Bethlehem Steel Corp., which rose $1.125, to $23.625, as its rival USX-U.S. Steel Group Inc., the nation's largest steelmaker, reported robust fourth-quarter profits, fueled by an 18 percent rise in steel shipments. USX shares rose $1.50, to $45.

The Nasdaq Combined Composite Index gained 1.25, to 794.28, breaking Thursday's record, as Apple reported fiscal first-quarter profits ahead of expectations.

More than nine stocks dropped for every eight that rose on the New York Stock Exchange, where volume was about 346 million shares.

Caterpillar shares surged $4.625, to a record $98.625, after the -- maker of earthmoving and construction equipment said its fourth-quarter operating profit was $1.17 a share, compared with a 2-cent loss in the year-earlier period.

The figure exceeded analysts' forecasts for earnings of 85 cents.

Technology stocks, like semiconductor and computer issues, were among the market's leaders after strong earnings announcements from Apple, BMC Software Inc., Electronic Arts Inc., Silicon Graphics Inc. and Sybase Inc., said Arnold Owen, vice president of institutional trading at SoundView Financial Group in Stamford, Conn.

Companies, like Caterpillar and Apple, "that came out with positive earnings are moving up, and the ones with negative reports are getting killed," said Kenneth Ducey, director of trading at BT Brokerage. "That's not a new story."

Although Apple's fiscal first-quarter net income fell to 34 cents a share, from $1.33, the result surpassed analysts' forecast by 1 cent. Apple's stock rose $3.50, to $33.375, after Merrill Lynch & Co. and Smith Barney Shearson raised their investment ratings.

Although records were set yesterday, the stock market has been "very heavily oriented" to the large stocks in the Dow Jones industrial average, said Lawrence Rice, chief market strategist at Josephthal Lyon & Ross. "Earnings for the cyclical companies are going to be fairly impressive because this is an area of the economy where companies have cut back to the bone."

The outlook for the broad market is dim, partly because "the number of new highs in this great, beautiful bull market has been pitiful," Mr. Rice said.

Japanese closed-end mutual funds dropped after Japan's upper house of Parliament voted down Prime Minister Morihiro Hosokawa's reform package.

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