Investor Optimism Pumps Up Blue-Chip Stocks
Blue-chip stocks crept to record levels Tuesday as investors took an optimistic stance on the Federal Reserve’s deliberations over whether inflation can remain tame without an increase in interest rates.
The Dow Jones industrial average shrugged off an early afternoon deficit of 38 points, rising 27.32 to 6,833.48, about 50 points shy of Jan. 21’s all-time best close at 6,883.90.
The Standard & Poor’s 500 list and the New York Stock Exchange composite index set new highs, but the Nasdaq market gave ground as investors moved to secure some profits on the recent strength in technology issues.
The focus of the day was the Fed’s periodic meeting on the economy and the central bank’s interest rate policy.
Few observers expect any action by the Fed, but with stocks trading at or near record highs, many investors see more risks than potential for gains in the market over the coming weeks.
“My suspicion is that we may have a bumpy February because a lot of the good news seems to be out. There’s not a lot of things on the horizon that could be construed as positive,” said Edward (Ned) Collins, head of stock trading at Daiwa Securities America.
Declining issues outnumbered advancers by a 10-to-9 margin on the New York Stock Exchange, where volume totaled 491.85 million shares as of 4 p.m., up from 463.59 million in the previous session.
Some of the stocks that moved substantially or traded heavily Tuesday:
NYSE
PepsiCo, down 1-1/4 at 32-7/8.
The company’s fourth-quarter earnings skidded an unexpectedly steep 85 percent due to losses in its international beverage business and slumping sales at the Pizza Hut and Taco Bell chains.
WMX Technologies, down 3-1/8 at 33.
The waste management concern plans to cut 3,000 jobs over the next three years and divest itself of about $1.5 billion in non-core businesses.
Sprint, up 3/4 at 41.
The company’s fourth-quarter earnings rose to $245 million on stronger profits from its local telephone operations, which offset a 2 percent drop in long-distance profits.
NASDAQ
Cisco Systems, down 1-1/8 at 67-1/8.
3Com, down 3-1/4 at 58-3/4.
Cascade Communications, down 1-3/8 at 37-3/4.
Market jitters about Cisco’s second-quarter earnings are hurting stocks across the computer networking equipment sector, the Dow Jones News Service reported. Slowing growth at Cascade Communications led a previous sell-off on Jan. 24. Dow Jones said Deutsche Morgan Grenfell and Adams Harkness & Hill cut their earnings estimates for 3Com, which last week warned of weakness in its business in late December.