Tuesday: Earnings Push Dow Near 6900

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The stock market held its breath Tuesday morning as

Federal Reserve Chairman Alan Greenspan

spoke, but that deep inhale turned out to be just the market priming itself for another sprint higher.

Greenspan was generally upbeat, though he did say the Fed was watching wages, which have spiked up lately, and he called the stock market's climb "breathtaking."

Investors saw nothing wrong with breathtaking. Apparently breathtaking is not even related to exuberance. Or irrational exuberance, for that matter.

All major averages hit records: the

Dow Jones Industrial Average

set yet another record, climbing 40.03 to 6883.90. The

Nasdaq Composite Index

followed, rising 12.69 to 1376.97, a record. The

Standard & Poor's 500

climbed 6.02 to 782.72. And the

Russell 2000

, which tracks small-cap stocks, was about flat, rising 0.97 to 370.32.

Onward, upward forever, right? So it seems. But some observers figure the market is getting into the thin air where it's harder to think straight.

"The market continues to be unperturbed by any potential negatives whatsoever," says Doug Kass, a partner in the investment firm

Kass Perkins Partners

. He notes, for instance, that the bond market -- despite gaining ground Tuesday with the benchmark 30-year Treasury adding 17/32 and its yield falling to 6.78% -- generally is in a down trend. But the stock market could care less.

"At the very least, high valuations, slowing earnings growth and somewhat higher interest rates are going to calm the euphoria," Kass says, adding that "the cycle has not disappeared, neither the economic cycle or the stock-market cycle."

Tuesday, the market was awaiting

IBM's

(IBM:NYSE) fourth-quarter earnings, which were reported after the bell. Well, actually it didn't wait. Investors pushed up IBM's stock 1/2 to 167 1/2 in anticipation of strong earnings, which did come. IBM earned $3.93 in the fourth quarter, up from $3.09 a year ago and better than the

First Call

consensus of $3.88. Still, investors pushed Big Blue's stock down at least initially in after-hours trading.

Three big banks reported earnings,

Citicorp

(CCI:NYSE),

Chase Manhattan

(CMB:NYSE) and

Wells Fargo

(WFC:NYSE). Citicorp said it earned $1.97 a share in the quarter, up from $1.72 a share a year earlier. Chase earned $1.89 a share compared with $1.73 a share in 1995's fourth quarter. Wells Fargo earned $1.12 a share, down from $6.29 a share a year earlier, but the most recent quarter included the impact of the

First Interstate

acquisition. Investors liked at least two of the three. Citicorp climbed 2 7/8 to 112 1/8, while Wells Fargo jumped 9 to 288 3/4. Chase was unchanged at 92 7/8.

Praise continued for

Banc One's

(ONE:NYSE) planned $7.3 billion acquisition of credit card issuer

First USA

(FUS:NYSE). Banc One climbed 1 5/8 to 43 1/4 after

Salomon

(SB:NYSE) and

Alex. Brown

upgraded the stock to a buy. First USA also gained again, adding 2 1/4 to 47 7/8.

Salomon

itself, meanwhile, rose 2 5/8 to 51 3/4 after saying it earned $1.98 a share in the fourth quarter compared with $1.42 a share a year earlier.

Analysts and investors applauded

Boeing's

(BA:NYSE) decision not to build a stretch version of its popular 747.

Merrill Lynch

boosted its 1997 earnings estimate to $6.45 a share from $6 a share because of savings that will come from dumping the stretch version plans. Boeing's stock added 7 3/8 to close at 113 7/8.

Caterpillar

(CAT:NYSE) posted improved fourth-quarter earnings--$1.99, which easily beat the

First Call

consensus, vs. $1.53 a year ago--but investors apparently wanted more. Caterpillar's stock slid 2 1/8 to 76 3/8.

Chrysler

(C:NYSE) said fourth-quarter earnings slid to $1.12 a share from $1.33 a share in 1995's fourth quarter, but without charges the most recent quarter was a record. Chrysler's stock added 1 1/2 to 36.

Lucent Technologies

(LU:NYSE) reported first-quarter operating earnings of $1.35 vs. $1.30 and its stock added 1 to 53 7/8.

Travelers

(TRV:NYSE) lost 3/4 to 51 1/4 after it reported that its fourth-quarter earnings grew to just 97 cents a share from 92 cents in the 1995 period.

Johnson & Johnson

(JNJ:NYSE) said fourth-quarter earnings increased to 42 cents from 36 cents, which investors liked, pushed up its stock 2 1/2 to 53 1/2.

LSI Logic's

(LSI:NYSE) stock added 7/8 to 33 5/8 in anticipation of its after-the-bell earnings, which came in at 23 cents a share, down from 51 cents a share a year earlier.

Mafco Consolidated

(MFO:NYSE) said

Mafco Holdings

offered to buy the remaining 15% stake in Mafco Consolidated that it doesn't already own for $38.50 a share. Mafco Consolidated jumped 8 1/8 to 35 1/4. The transaction also would include Mafco Consolidated selling 13% of its 80% stake in

Consolidated Cigar

(CIG:NYSE). Consolidated Cigar closed at 24 3/8, down 1/8.

Remedy

(RMDY:Nasdaq) added 8 7/8 to close at 48 7/8 after

Goldman Sachs

analyst Rick Sherlund put the software company's stock on his recommended list.

Nellcor Puritan

(NELL:Nasdaq) fell 5 7/8 to 18 following its report of a second-quarter loss of six cents a share compared with net income of 30 cents a share a year earlier.

J.P. Morgan

(JP:NYSE) also downgraded the stock to market perform from buy.

By Erle Norton

enorton@thestreet.com