Stock-market bulls had another enriching mix of good news Tuesday: low inflation and further signs of stable economic growth.
Moreover, anticipation of solid earnings from technology bellwether
(INTC:Nasdaq), which reported after the close, bolstered the good mood on Wall Street. Intel reported fourth-quarter earnings of $2.13 a share, well above analysts' expectations of $1.84 per share as tracked by
. The robust number more than doubled last year's fourth-quarter earnings of $.98 cents per share.
Dow Jones Industrial Average
climbed 53.11 to a record 6762.29, the measure's sixth record in seven sessions. Other measures also set records: the
Nasdaq Composite Index
surged 15.45 to 1346.36 and the
rose 9.35 to 768.86. The
, which measures small-cap stocks, lost 0.03 to 362.28.
Consumer Price Index
rose just 0.3% in December, as expected. Excluding food and oil prices, the CPI tacked on a tepid 0.1%. That cheered fixed-income investors, who pushed the benchmark 30-year Treasury bond up 1 point, and the yield fell to 6.77%.
"When the CPI came out everybody sighed a sigh of relief," said Stanley A. Nabi, vice chairman and chairman of the investment policy committee at Wood, Struthers & Winthrop, a unit of
Donaldson Lufkin & Jenrette
The tame-inflation news suited bank stocks, too, which are sensitive to interest rates. In addition, banks are reporting strong fourth-quarter earnings, leading investors to bet that even those that have yet to report will also disclose strong performances.
(SNB:NYSE) increased 1 1/8 to 36 1/2 after it reported that fourth-quarter earnings rose to 72 cents a share from 64 cents a share a year ago.
(STB:NYSE) was up 2 1/4 to 95 1/4 after it said it earned 48 cents a share, compared with 40 cents a share a year ago. Other banks also went along for the ride.
(WFC:NYSE) jumped 5 7/8 to 282 3/8.
(CCI:NYSE) climbed 3 7/8 to 104 1/4.
In other bank news,
(BBI:NYSE) was up 7/8 to 41 3/4 after it said it reached an agreement to acquire
(OXFD:Nasdaq) for $570 million in stock. Oxford climbed 3 1/8 to 36 1/2.
Technology stocks played tag along with Intel. It closed at 147 1/8, up 1/4, ahead of its earnings report.
(GATE:Nasdaq) rose 3 7/8 to 56.
(DELL:Nasdaq) climbed 4 to 65 3/8. And
(MSFT:Nasdaq) was up 1 1/2 to 85 3/8.
After the bell,
(BAY:Nasdaq) reported terrible earnings for the quarter ended Dec. 31. While the Street had expected 24 cents per share, according to First Call, Bay actually reported a loss of 90 cents per share. That figure included $1 of charges related to two acquisitions and a consolidation of its product line.
But in after-hours trading, Bay was trading at 22 3/4, having closed the day at 22. Some traders said the firm's deal to help build a 50-city Intranet in China helped assuage investors irritated with the quarterly earnings.
The networking equipment sector as a whole performed well today--
(ASND:Nasdaq) gained 1 3/4 to 70 3/8;
(CSCO:Nasdaq) climbed 2 7/8 to 72 1/8; and
(COMS:Nasdaq) added 3 1/4 to close at 74 3/8.
Among other stocks,
(F:NYSE) rose 1/2 to 33 3/4. The comapny said it would sell its Budget care rental unit to
(TBUD:Nasdaq). Team Rental slipped 1/4 to 23.
Lone Star Steakhouse's
(STAR:Nasdaq) earnings increased to 56 cents a share from 42 cents a share. The company's stock climbed 1 1/4 to 26 7/8.
The big gains of most stocks, however, are making some observers queasy. "At the moment, the feeling is this is kind of a paradise on earth forever," Nabi says. "There's a feeling that the Fed won't act." But Nabi adds that "if the economy continues to show strength I don't think the bond market will take it very kindly."
By Erle Norton