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Stocks aloft on CPI, profits
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July 15, 1999: 1:44 p.m. ET
Lingering inflation relief buttresses earnings-spawned gains on Wall St.
By Staff Writer Malina Poshtova Zang
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NEW YORK (CNNfn) - Tame inflation and a steady trickle of strong earnings reports gave Wall Street a restrained burst of upward momentum Thursday, although a dour bond market and some profit taking kept stocks from breaking into a full rally.
Shortly before 1:30 p.m. ET, the Dow Jones industrial average was 43.06 points higher at 11,191.16. On the New York Stock Exchange gainers outpaced losers 1,552 to 1,217 as 467 million shares changed hands.
The Nasdaq composite index gained 13.62 points to 2,831.75 and the S&P 500 index advanced 11.16 to 1,409.33, both moving in record territory. (Click here for a look at today's list of CNNfn market movers.)
Gains in the stock market were limited by uncertain trading in bonds, which initially rallied to news that the consumer price index was unchanged in June before backpedaling in sympathy with a slide in the European bond market. The bellwether 30-year Treasury bond eased 5/32 of a point in price, its yield edging up to 5.92 percent.
The dollar was nearly unchanged against the yen following the morning's minor round of Bank of Japan dollar-buying. The Japanese central bank has bought dollars several times in the recent past to keep the yen subdued.
The greenback retreated from the euro as speculators read the possibility of rising European interest rates into comments from European Central Bank Governor Wim Duisenberg.
Rate-sensitive stocks on a roll
In the stock market, financial services shares, which are the quickest to react to any indication of interest rate changes, took advantage of the mild CPI number and the bond market's sudden burst to head higher.
Among the Dow's financial components, shares of American Express (AXP) jumped 3 to 134-1/2 and Citigroup (C) rose 11/16 to 48-1/8.
Elsewhere in the market, Chase Manhattan (CMB) was up 3/8 at 82-1/8 and BankAmerica (BAC) rose 3/4 to 74-11/16.
Gains on the Dow were supported by Coca-Cola (KO), which saw shares climb 2 to 63-7/8 after the company's second-quarter earnings met analysts' expectations. Although Coke's profit dropped 21 percent compared with a year earlier, analysts had lowered their forecasts to reflect the company's troubles in Europe.
Boeing (BA), on the other hand, slipped 5/8 to 47 even though the Dow aerospace manufacturer posted surprisingly strong second-quarter earnings. The company earned 75 cents per diluted share in the period, 8 cents more than the market had expected, as revenue surged 13 percent.
A fresh profit warning from US Airways (U) drove shares of the airline down 2-3/4 to 41-9/16 and cast a pall over the rest of the transportation sector, knocking the Dow transports down nearly 23 points to 3,398.55.
In a filing with the Securities and Exchange Commission, US Airways said earnings in the second half of 1999 will fall below analysts' forecasts. The carrier earlier had warned Wall Street that second-quarter profits will miss the mark, blaming unflattering revenue trends and rising fuel and labor prices for the anticipated shortfall.
Techs calm down
In the high-profile technology sector, investors appeared ready to slow their recent record-breaking buying spree and even cash in on some gains, despite a continuous stream of solid profit reports from some premier members.
Shares of Apple Computer (AAPL) eased 1-15/16 to 54 after climbing for days in advance of the company's latest earnings report. Late Wednesday, Apple stunned even the most optimistic on Wall Street by solidly beating market predictions for its third-quarter profit. Apple earned 69 cents a share on an operating basis, 5 cents more than Wall Street had bet on.
However, CIBC World Markets cut the stock to "underperform" from "hold" Thursday, citing a cloudy growth outlook for the current quarter, and lowered its price target to the $40-$45 range.
Other computer makers were caught between the profit-taking urge and continuing excitement over upcoming earnings. Among the gainers, Dell (DELL) edged up 1/4 to 43-3/4 and Gateway (GTW) surged 2-3/8 to 75-5/8.
Both of the Dow's computing components gave up ground won in Wednesday's rally. IBM (IBM) shed 1-5/16 to 135-15/16 and Hewlett Packard (HWP) eased 9/16 to 107-7/8.
Chip stocks traded unevenly in the wake of the week's mixed bag of earnings reports from semiconductor companies. Sector heavyweight Intel (INTC) edged up 7/16 to 68-7/16, but chief competitor AMD (AMD) shares slipped 3/8 to 17-5/8 after overnight posting a widely-anticipated operating loss.
Elsewhere in the chip sector, National Semiconductor (NSM) shares climbed 9/16 to 27-7/8. The company unveiled its new all-on-one-chip integrated processor design Thursday. 
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