Fed Chief’s Remarks Trigger Strong Advance

The Dow Jones industrial average roared back above 8,000 Tuesday as Federal Reserve Chairman Alan Greenspan delivered a midyear report to Congress without firing any warning shots at the markets.

The Dow rose 154.93 to 8,061.65, erasing the remainder of Friday’s 130-point slide and beating last Wednesday’s record close of 8,038.88, when the blue-chip index topped 8,000 for the first time.

Broad-market indicators also posted big gains to snap a three-session slump and move within striking distance of last week’s record highs.

Stocks were posting more modest gains until Greenspan’s afternoon appearance on Capitol Hill, which was seen as one of the few near-term threats to the virtually ideal outlook on inflation and interest rates that has catapulted the stock market to new highs.

As usual, the Fed chairman warned Tuesday that the central bank wouldn’t hesitate to hike its lending rates if any inflationary pressures emerged. But his fairly mellow tone was taken as a green light in the markets.

“He’s taken the only potential negative blip off anybody’s radar screen,” said John Cleland, chief investment strategist at Security Benefit Group in Topeka, Kan., noting there are few major economic reports due in the near term.

Advancing issues outnumbered decliners by a 5-to-2 margin on the New York Stock Exchange, where volume was heavy at 579.56 million shares as of 4 p.m., up sharply from Monday’s pace.

Some of the stocks that moved substantially or traded heavily Tuesday:

NYSE

IBM, down 3/4 at 103.

Strong demand for IBM’s computer services, mainframes and parts helped buoy profits by 7.4 percent in the second quarter, offsetting weak demand for big business machines and consumer PCs. The results - released after Monday’s close - were slightly above expectations.

Walt Disney, up 2-7/16 at 77-5/8.

The media conglomerate’s profits increased 18 percent for its latest quarter, benefiting from improved live-action film results and gains at its theme parks.

Philip Morris Cos., up 2-1/8 at 42-5/8.

RJR Nabisco, up 1-1/16 at 30-7/8.

The two tobacco-food conglomerates posted strong second-quarter profits. Philip Morris reported a 13.3 percent improvement for the period, while RJR swung from a loss in the same period a year ago.

Pepsico was up 2-1/2 at 38-1/16.

The food company reported second-quarter results that beat expectations.

NASDAQ

McAfee Associates, down 7-1/2 at 69-3/4.

The maker of network security software beat forecasts for its second-quarter profits, but some items in the earnings report were seen as unsettling.