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Dow hangs on 8,000
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July 16, 1997: 1:58 p.m. ET
Benign inflation and hot earnings light up Wall Street
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NEW YORK (CNNfn) -- Impressive corporate earnings and more evidence that inflation remains benign pushed the Dow Jones industrial average above the milestone 8,000 mark Wednesday afternoon.
Entering the day at a record level, the Dow gained 42.04 points to 8,017.75 by 2 p.m. The rise might have looked even more impressive were it not for component Eastman Kodak (EK), which tumbled 8-9/16 to 68-5/16 after reporting that it earned $1.12 per share in the second quarter, about 17 cents below estimates.
Despite Kodak's weakness, analysts said blue chips and broader market issues looked strong. "I think this market is going to go a lot higher," said William Lefevre, senior strategist at Ehrenkrantz King Nussbaum. "From time to time you'll have some little stumbling blocks, like Kodak today. But in general, the market's going higher. Whether you want to talk 8,500, 9,000 later on this year, who knows?"
Stocks followed bond prices higher in reaction to government reports that continued to show that the U.S. economy is growing at a steady clip with inflation remaining barely visible.
In the first report, the Commerce Department said the consumer price index rose just 0.1 percent in June and finished the first half of 1997 at its slowest pace in 11 years. The Federal Reserve later reported that industrial production rose 0.3 percent in June, a steady increase that came from gains in manufacturing of cars, aircraft and computers.
"It's really amazing. Our economy is growing at over 4 percent real growth and in the midst of that we have barely any inflation," said Kathleen Camilli, chief economist at Tucker Anthony. "Quite unprecedented."
Bonds reacted quickly. The 30-year Treasury gained 24/32 in price, lowering the yield to 6.48 percent.
Among the other leading indexes, the Nasdaq Composite, which set its ninth-straight record on Tuesday, surged another 28.02 to 1,570.13. Key technology shares powered the measure. At the same time, S&P 500 index extended its record pace, rising 7.99 to 933.75.
On the New York Stock Exchange, advances led declines, 1,815 to 995, as 424 million shares changed hands.
Looking at noteworthy issues, Ford Motor (F) slipped 1-11/16 to 40-7/16 despite reporting record earnings of $2.06 per share for the quarter, well above the $1.84 result Wall Street had forecast. The automaker attributed 8 cents per share of the profit to its successful public offering of the rental-car unit Hertz.
Along with Ford, rival General Motors reported earnings above expectations. Shares of GM (GM) rose 3/4 to 55 in reaction to profits of $2.68 per share. That figure topped estimates by a full 58 cents.
ITT (ITT) also made headlines. It jumped 4-5/8 to 67-1/4 amid plans to split itself into three separate companies to ward off unwelcome suitor Hilton Hotels. Hilton has bid $6.5 billion for the company, an offer ITT flatly refused. Hilton (HLT) added 3/8 to 29-3/8.
Pfizer (PFE) shed 2-5/16 to 59-3/16 on earnings of 35 cents per share against 31 cents a year ago, while Time Warner (TWX) rose 3-13/16 to 49-3/16 after narrowing its quarterly loss from $110 million last year to $49 million. Revenues rose from $4.75 billion to $5.92 billion. Time Warner is the parent company of Cable News Network and CNNfn.
Chipmaker Intel (INTC) gained 5-15/32 to 86-3/8 in the first trading session after it turned in a quarterly profit of 92 cents per share while Ascend Communications (ASND) climbed 1 to 54-7/8 after turning in profits of 31 cents per share, excluding a one-time charge related to an acquisition.
And Microsoft (MSFT) gained 7-25/32 at 146-1/4. Analysts are anticipating that the software giant will release impressive earnings after the closing bell.
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