NEW YORK -- U.S. stocks reached record highs yesterday amid optimism about first-quarter earnings, analysts said. Finance, drug and technology shares led the gains.
"Stocks responded well to better-than-expected earnings," said Peter Anderson, chairman and chief investment officer of IDS Advisory Group in Minneapolis.
J. P. Morgan & Co. and Aluminum Co. of America led the Dow Jones industrial average up 10.37, to 4,208.18, its 17th record high this year, chalking up a 15.56-point advance in a shortened holiday week.
J. P. Morgan shares soared $3.25, to $63.875, and boosted other bank and financial stocks when it posted better-than-expected profits. Citicorp was up 75 cents, to $46.25, and Chase Manhattan Corp. added 75 cents, to $41.75.
"The expectation was that banks' earnings might be hurt by a hard year" of derivative and currency losses, said Peter Canoni, managing director for equity investments at Aeltus Investment Management Inc., which manages $4 billion. "I think people are relieved."
Alcoa strengthened $2.125, to $44.75, after analysts said aluminum companies' profits will continue to grow in the next two years. "The group rally has been sparked by tremendous earnings for the first quarter," said Anthony Rizzuto Jr., an analyst with Bear, Stearns & Co. "And they show these companies are fundamentally changed for the better from the last cycle."
Aluminum producer Alumax Inc. said yesterday it rebounded from a year-earlier loss with a first-quarter profit that surpassed Wall Street's expectations, thanks to higher aluminum prices. Last Friday, Alcoa reported earnings for the quarter that ended March 31 soared to $1.08 a share from 5 cents a year ago. Shares of Alumax rose $1, to $27.625.
United Technologies jumped $1.125, to $70, after Merrill Lynch & Co. analyst Jeanne Terrile said the jet-engine maker's earnings per share should rise 20 percent this year, even though sales remain unchanged, thanks to cost cutting. She initiated coverage of the stock with an "above average" rating. Prudential Securities upgraded the stock to a "buy" from "hold" as well.
Among broader market measures, the Standard & Poor's 500 stock index added 2.06, to 509.23, its 21st record high this year. Health care, semiconductor and drug shares gained while auto, gold and chemical issues lost.
Drug shares were among the biggest gainers after analysts said other drug companies were likely to post healthy earnings for the quarter. Warner-Lambert Co. jumped $1.75 to $81 after it said it expects its earnings per share to grow between 6 percent and 8 percent this year. Johnson & Johnson shares rose $1.50, to $61.625.
Shares of Pfizer Inc. and Schering-Plough jumped after an analyst at PaineWebber Inc. recommended on Wednesday that investors buy the drug companies' stocks, citing continued strong earnings. Pfizer rose $1.50, to $89.875, and Schering-Plough was up $1.625, to $79.125.
The Wilshire 5,000 index also reached a record high, gaining 20.6 points, to 4997.18. The Russell 2,000 index was up 1.02, to 263.98, its third consecutive high this week.
Technology stocks continued their charge up after Altera Corp. posted a 97 percent increase in first-quarter profits, thanks partly to a vibrant semiconductor market. Altera surged $9, to $71.125, surpassing Wednesday's 52-week high.
Intel shares continued their march to record highs, jumping $3.25, to $95. The stock has risen 9 percent this week. "Intel is riding the crest of the Pentium wave, after [Advanced Micro Devices Inc.] announced it would be late on chip delivery," said Mr. Canoni of Aeltus Investment Management. "That means Intel owns the market."
Chipmaker Burr-Brown Corp. surged $6.375, to $24.50, after it said first-quarter earnings more than doubled from last year. Trading was light yesterday, the day before a holiday weekend. About 301.5 million shares changed hands on the NYSE, compared with 327.89 million shares Wednesday.