Stocks Near Record Highs on Strong Earnings, Low Inflation
NEW YORK (AP) _ Investors ignored black cats and broken mirrors and focused on higher corporate profits and lower inflation _ sending stocks to near-record levels on Friday the 13th.
Major indexes spent much of the day at new highs, but pulled back somewhat near the close as profit-takers moved in.
Nonetheless, the Dow Jones industrial average rose 28.90 to 4,793.78, its third highest close ever, just behind levels set in mid-September.
Historically, October one of the most unlucky months of the year, with two crashes in 1929 and 1987. The last time Friday the 13th fell in October was in 1989. On that day the Dow dropped 190.58 points, it’s second biggest point drop ever.
Advancing issues outnumbered decliners on Friday by about 2 to 1 on the New York Stock Exchange, where volume totaled 374.00 million shares as of 4 p.m., vs. 343.95 million in the previous session.
The NYSE’s composite index gained 1.28 to 313.65. The Standard & Poor’s 500-stock index rose 1.40 to 584.50.
The Nasdaq composite index rose 2.75 to 1,018.38. At the American Stock Exchange, the market value index rose 3.59 to 535.39.
Pessimism about third-quarter profits that had pushed stocks down in the past few weeks continued to evaporate. Reports showing unexpected increases in earnings outnumbered downside surprises by about 2-to-1 Friday.
Analysts said the early October market decline was partly spurred by companies that were warning in advance that their quarterly reports would miss analysts’ profit predictions.
The Securities and Exchange Commission requires such warnings if the difference is significant and making the warnings is in companies’ interest.
``You don’t want to be in a position of reporting a negative surprise,″ said Philip Orlando, senior vice president at First Capital Advisers in New York. ``That’s the worst thing you can do. The market will simply take your stock out back and shoot it.″
Jack White, director of the investment strategy group at Interstate-Johnson Lane in Charlotte, N.C. said: ``You’ve probably seen most of the negative surprises in earnings preannounced. With that out of way companies that have good numbers have the opportunity to show their stuff.″
Also Friday morning, the Labor Department reported that the September consumer price index rose a minuscule 0.1 percent, sending the yields on long-term U.S. Treasury securities down to 20-month lows. That boosted the prospect of lower interest rates for corporate and consumer debt, and helped accelerate the stock rally.
Charles Comer, Credit Lyonnais Securities’ director of research, said the late day falloff shows that investors are still skittish that a sharp downturn may be forthcoming _ simply because the market is now so high.
``The market is at or near record highs. People are anxious. It’s tough to make a strong case to buy X, Y or Z because they’re not as cheap as they were six months ago. A lot of people have profits and are worried about seeing them evaporate.″
Computer companies led most technology stocks higher. Digital Equipment Corp. was upgraded by two brokerages Friday morning. Its shares rose 3 1/4 to 49 3/8. Dell Computer Co. gained 3 to 83. Sun Microsystems rose 2 11-16 to 59 15-16.
Left out of the tech rally were semiconductors. Analysts said this could be due to caution ahead of next week’s quarterly report by industry leader Intel Corp. Intel fell 1 to 62 3/4. Texas Instruments lost 1 3/4 to 72 3/8.
Banks and financial firms, which benefit from lower interest rates, were higher. Fleet Financial rose 1 to 40 1/4. Merrill Lynch was up 1 1/4 to 64 1/8. Morgan Stanley gained 2 1/2 to 97 1/4.
Cyclical stocks, which rise and fall with the economy, also were stronger.
Chemical maker Monsanto gained 1 1/4 to 101 3/4. Paper maker Boise Cascade rose 1 1/8 to 38 7/8.