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Earnings Forecast Spurs Market : IBM Paces Way as Dow Charges to New Record

July 09, 1987|From Times Wire Services

NEW YORK — The Dow Jones industrial index climbed to a record high Wednesday as the stock market pushed ahead in active trading.

Analysts said strength in International Business Machines shares helped set the mood for the general market after a sluggish morning marked by some sporadic selling.

The Dow Jones index of 30 industrials rose 14.19 to 2,463.97, surpassing the previous closing peak of 2,451.05 reached on June 25. Some other, broader indicators of stock price trends showed less strength, finishing just below their highs of late last month.

Volume on the New York Stock Exchange reached 207.46 million shares, up from 200.73 million in the previous session.

IBM shares gained 2 7/8 to 166 3/4, aided by a Wall Street Journal article quoting some analysts as saying the company's earnings for the second quarter may come in better than has been expected.

Another prominent blue chip issue, General Electric, rose 3/4 to 56 5/8. The company reported a second-quarter profit of 79 cents a share, up from 68 cents in the comparable period last year.

Many traders have been busy lately trying to outguess prospects for the second-quarter earnings reports, which will be issued in the next few weeks.

Overall, expectations are running high for a good showing. However, some observers said those hopes may already be reflected in stock prices.

If earnings fail to live up to their advance billing, a good many brokers said the market could be vulnerable to a setback.

In fact, even in cases where the figures hit Wall Street targets, some people worry that traders who bought earlier on expectations of positive results will use the news as an occasion to take profits.

Texaco was actively traded, up 1/2 at 45. A group led by Australian investor Robert Holmes a Court said it increased its Texaco holdings to 7.44% of the shares outstanding from 6.4%.

Japanese stocks traded in this country fell sharply, suggesting that traders were cashing in on gains in those issues to shift their money into U.S.-based blue chips.

Matsushita Electrical tumbled 11 3/4 to 142 3/4, Hitachi fell 5 3/4 to 71 3/4, Kyocera dropped 4 1/2 to 72 3/4, Honda Motor fell 5 1/2 to 103 1/8 and TDK declined 2 1/2 to 52.

Teledyne jumped 21 to 377. On Tuesday, Kidde Inc., in which Teledyne has a substantial investment, said it was considering a restructuring or selling assets.

There was talk on Wall Street on Wednesday that some other companies in which Teledyne has a large stake might be candidates for similar actions.

In the bond market, meanwhile, prices fell in mostly light, lethargic trading, finishing near their lows of the day.

The Treasury's closely watched 30-year bond dropped about 7/8 point, or $8.75 per $1,000 in face value. Its yield jumped to 8.45% from 8.39% on Tuesday.

Corporate and municipal bonds were mostly lower.

Analysts said bond prices tracked movements of the dollar on world currency markets early in the session, but then drifted down.

Bond prices fell sharply earlier this year on speculation that a weak dollar would bring higher inflation and reduce the strong foreign demand for U.S. securities.

In the secondary market for Treasury bonds, prices of short-term government issues finished 1/8 point lower to 1/16 point higher, intermediate maturities fell 5/32 point to 1/2 point and 20-year issues lost 25/32 point.

In corporate trading, industrial issues and utilities declined 3/8 point in light activity.

Among tax-exempt municipal bonds, general obligations rose 1/8 point and revenue bonds fell 1/8 point in light trading.

Yields on three-month Treasury bills slipped 1 basis point to 5.58%. Six-month bills dropped 13 basis points to 5.43%, and one-year bills were unchanged at 6.20%.

The federal funds rate, the interest on overnight loans between banks, was quoted at 6.438%, down from 6.563% on Tuesday.

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