FINANCIAL MARKETS : Profit Reports Push Stocks Mostly Higher

Market Overview

* Corporate earnings reports took the spotlight Tuesday, helping to push most stock indexes higher.

* Treasury bond yields drifted lower, while in commodity markets heating oil prices plummeted after a recent rally.

Stocks

The broad market advanced, but the blue-chip Dow industrials took a rest.

Caught in a cross-fire of profit taking and more strength in economy-sensitive stocks, the Dow closed unchanged at its record of 3,870.29 set Monday. A small gain late in the day faded in the final minute of trading.

However, winners topped losers 12 to 9 on the New York Stock Exchange on heavy volume of 309.7 million shares.

And in the Nasdaq Stock Market of mostly smaller issues, the composite index edged up 0.84 point to 793.02, a new high that topped the prior peak of 792.31 set Friday.

“The last two hours (Nasdaq stocks) started sneaking on the upside. But it was not much of a rip-roaring day,” said analyst Bob Padala at brokerage Donaldson, Lufkin & Jenrette.

Fourth-quarter profit reports from the nation’s major companies have begun to flow in earnest this week, and those reports helped drive much of Tuesday’s action.

Chrysler’s healthy earnings report drove its shares up 3/4 to a new all-time high of 62 1/2. But some major bank stocks lost ground despite strong earnings reports.

Overall, “people have seen what amounts to very favorable earnings reports,” said Joseph DeMarco, managing director of equity trading at Marinvest.

That is important, because with stock prices at or near record highs, analysts say that only robust earnings can give investors the confidence to bid prices up further.

Among Tuesday’s highlights:

* Chrysler’s earnings report pulled up General Motors’ shares, which jumped 1 3/8 to 62 1/8, and Ford Motor, which added 1/4 to 68 5/8.

Other industrial issues that gained included GE, up 1 1/4 to 108 3/8; Cummins Engine, up 1 to 55 3/4; Illinois Tool Works, up 7/8 to 42 1/8, and industrial parts distributor W.W. Grainger, up 3 1/8 to 61 7/8.

* Among other stocks rising on earnings reports included chemical maker Morton International, up 5 3/4 to 105; Johnson Controls, up 2 1/2 to 58 1/2; Federal Home Loan Mortgage Corp., up 1 3/8 to 54 3/4, and software firm Powersoft, up 4 to 48.

* On the downside, investors panned earnings reports from Honeywell, which fell 7/8 to 32 3/4; bank teller machine maker Diebold, which dropped 2 5/8 to 60 5/8, and carpet maker Shaw Industries, which sank 3 to 21.

After the market closed Tuesday, computer chip giant Intel reported quarterly earnings that fell below expectations. Though the stock closed up 1 to 67 1/4, some analysts predicted a dive today.

* Bank stocks were mixed as many large banks reported earnings. Losers included Banc One, down 7/8 to 36 7/8, and Nationsbank, down 1/2 to 49 1/4.

James Solloway, director of research at Argus Research Corp., attributed the lack of investor interest in bank shares, despite solid earnings, to the shift away from interest-sensitive issues in general since last fall.

As the economic recovery gathers steam, many investors are assuming that interest rates will continue to rise, squeezing bank profit margins, Solloway said.

* Elsewhere, Eli Lilly, which announced that it will divest its medical devices and diagnostics operations to focus on its core pharmaceutical business, surged 1 5/8 to 61 1/2. * Capital Cities/ABC leaped 12 1/8 to 637 after an Oppenheimer analyst predicted the stock could hit $1,000 a share, helped by an earnings turnaround.

* Private-label soft drink maker Cott plunged 2 1/8 to 24 7/8 after brokerage Mabon Nugent cut its rating on the stock.

* Biotech firm Genzyme rose 3 1/4 to 34, although the company said there was no news to push the stock higher.

Stocks ended mixed abroad, with the Mexico City’s Bolsa index rising 50.29 points to 2,556.62, bolstered by hopes the conflict in Chiapas will be resolved soon.

In Tokyo, the Nikkei average closed at 18,514.55, down 210.82 points, while London’s FTSE-100 index rose 29.2 points to 3,437.0. Germany’s DAX average ended at 2,113.84, down 23.54 points.

In Toronto, the TSE-300 index surged to a new high, up 17.66 points to 4,561.90.

Other Markets

The Treasury’s main 30-year bond yield eased to 6.26% from 6.29% as the bond market continued to mark time.

Lending strength to the Treasury market were purchases by cities and states seeking to stow proceeds from recent municipal bond sales.

Elsewhere, heating oil prices collapsed Tuesday, dragging down crude oil and gasoline futures, as a break in the cold weather gripping the eastern half of the country was forecast for the weekend.

February heating oil futures lost 6% of their value, dropping 3.18 cents to 49.49 cents a gallon on the New York Merc.

Forecasts for a thaw also pressured hog prices at the Chicago Merc. Prices have risen recently because the bitter weather is hard on the animals and makes it difficult to transport them to market.

Meanwhile, gold advanced: Near-term futures added $1.50 to $393.10 an ounce on the New York Comex. Silver added 1.7 cents to $5.33.