FINANCIAL MARKETS : Stocks Edge Up Again, Hitting Record Highs

Wall Street stocks edged to more records Wednesday despite selling in health maintenance stocks sparked by a profit warning from Humana Inc. and nervousness ahead of Friday’s so-called “triple witching” options expiration.

The bond market remained stable after Tuesday’s run-up in yields, with a small increase, to 6.57% from 6.54%, in the Treasury’s main 30-year bond yield. The dollar fell after Germany’s central bank declined to lower interest rates.

The Dow Jones industrial average rose 6.57 points to a record 4,491.08, surpassing the previous record of 4,485.20 set June 6. The Standard & Poor’s 500-stock index and the New York Stock Exchange and Nasdaq composite indexes also set records. Losers beat gainers 1,146 to 1,066 on the Big Board, where volume was 330 million shares.

“The market has moved into stall, waiting for expirations from now through tomorrow,” said Elaine Yager, technical analyst at Herzog Heine and Geduld.

On Friday, index options, individual equity options and index futures-options all expire in what is known as a triple-witching, a confluence of expirations that can lead to highly volatile trading in the stock market as investors cover various positions.

Analysts said investors Wednesday were wary of taking any major positions ahead of the triple witching, mindful that the so called “double witching” on May 19 helped clip 82 points off the Dow on May 18.

“Is this still a bull market? Absolutely. And everyone who’s buying now is buying with the full knowledge that there could be a 5%-7% correction at some point,” Yager said.

The stocks of health maintenance organizations took a tumble after Humana said its second-quarter earnings would fall short of Wall Street expectations. Humana lost 3 1/4 to 19 5/8, United HealthCare shed 2 3/8 to 40, U.S. Healthcare fell 1 7/8 to 32 1/4 and Oxford Health Plans was off 1 3/8 to 56 1/2.

“The other HMOs are down in sympathy,” one trader said. “When the granddaddy sneezes, everyone else wipes their nose.”

Peter Canelo, chief investment strategist at NatWest Securities, noted a rebound in shares of retailers and auto makers.

“The patterns I see are consistent with the belief this is the worst part of the year economically and stocks are better on the belief of a stronger economy in the second half.”

Analysts said stocks largely shrugged off figures released in the morning indicating higher April business inventories and higher first-quarter non-farm productivity.

Among market highlights:

* Chemical stocks slid after Rohm & Haas warned late Tuesday that its second-quarter profits would probably not exceed the $1.37 per share of a year ago, citing a slowdown in its business in North America and Latin America and a drop in U.S. housing starts, slowing automobile production and a weakening textile industry. Merrill Lynch downgraded the shares to near-term “hold” from “buy”; Rohm & Haas fell 1 7/8 to 52. DuPont fell 7/8 to 65 3/8, Monsanto dropped 1 5/8 to 89 1/8 and Union Carbide edged 1/8 lower to 29 3/4.

* ITT continued to climb on investor enthusiasm over its plans to spin off its businesses into three publicly held companies. The stock rose 3 to 117 7/8, after having risen 5 5/8 on Tuesday.

* COR Therapeutics plummeted 8 1/2, or 45%, to 10 1/4 after the biotechnology company said a preliminary analysis of trial results for its Intergrelin cardiovascular drug were not statistically significant.

* Sybase jumped 3 1/2 to 28 1/2 on market rumors it was a target for a takeover by Microsoft, Sun Microsystems or IBM. Sybase said there was no basis for the rumor.

The dollar came under further pressure when Germany’s Bundesbank failed to lower interest rates, which some foreign exchange traders had expected it to do. Lower rates would have diminished the attractiveness of mark-denominated investments, indirectly bolstering the dollar. In late New York trading, the dollar was changing hands at 1.4010 German marks, down from 1.4085, and at 84.34 Japanese yen, down from 84.63 late Tuesday.

Traders also speculated that the major central banks would be unlikely to intervene in the market to support the dollar immediately before or during today’s meeting of the industrialized nations, known as the Group of Seven.

In Tokyo, stocks reversed a punishing four-day losing streak to end moderately firmer. Bargain hunting on weakness and arbitrage-linked buying helped the 225-share Nikkei average gain 60.81 points or 0.42% to close at 14,660.49. London stocks drifted down, with the FTSE-100 down 8.2 points at 3,339.8. Frankfurt’s DAX index ended up 12.91 points at 2,128.02.

Grain prices, which had risen this spring as wet, cool weather delayed planting, rallied again on drought fears. A forecast issued Wednesday calls for a week of hot, dry weather with only scattered showers in the Grain Belt.

July wheat rose 7.75 cents to $3.86 3/4 a bushel, the highest level for a spot contract since Jan. 6, at the Chicago Board of Trade.

Market Roundup, D7