More Records After Upbeat Fed Remarks

The “exuberance” for blue-chip shares continued Tuesday as Alan Greenspan issued his usual warnings on inflation, but in a kinder, gentler fashion, producing another day of record highs.

The Dow Jones industrial average rose 40.03 points to 6,883.90 for its fourth straight record finish and 10th new high in 12 sessions. More than half the Dow’s gain came from Boeing and IBM.

Broader measures also closed at new highs after bouncing back from a weak start with bonds. But most of the day’s advance was driven by larger companies.

After sliding almost 44 points near the open, the Dow later was up as much as 50 points, moving within 6 points of 6,900 less than four months after its first move above the 6,000 mark.

For much of the session, attention was fixed on Greenspan, who appeared before a Senate panel to discuss the state of the economy. Although he did warn about the risks of wage-driven inflation, his address was upbeat, as he noted that the economy has shown vigor with little sign of inflationary tensions.

“Greenspan’s speech was much more market-friendly than the comments he’s previously made and the comments made recently by some other Fed officials,” said Hugh Johnson, chief investment officer at First Albany.

Bonds rallied soon after Greenspan’s testimony ended, giving stocks the green light to resume their torrid climb.

The benchmark 30-year Treasury bond rose more than half a point, lowering its yield to 6.78% from Friday’s close of 6.83%. The bond market was closed Monday in observance of Martin Luther King Jr.’s birthday.

Advancing issues outnumbered decliners by a narrow margin on the New York Stock Exchange, where volume was very heavy.

Setting new highs again were the Standard & Poor’s 500-stock list, up 6.02 points to 782.72; the NYSE composite index, up 2.26 points to 411.57; the Nasdaq composite index, up 12.69 points to 1,376.97; and the Russell 2,000 list of smaller companies, up 0.97 point to 370.32.

Among Tuesday’s highlights:

* IBM rose 1 to a nine-year high of 168 in anticipation of a strong earnings report. Though investors viewed the results favorably, many felt an even higher number was needed for it to sustain the recent surge in its stock.

* Far clearer was Wall Street’s attitude about Boeing’s decision to scrap plans to build a costly stretch version of its 747 jumbo jet. Shares surged 7 3/8 to 113 7/8. Industry analysts said the decision removed a cloud of uncertainty, and they estimated the move could save the aerospace giant more than $2 billion in expenses over five years.

* Besides IBM, a number of tech issues rose, including Microsoft, up 4 1/4 to 95; Intel, up 2 13/16 to 148 1/16; and Sun Microsystems, up 1 to 33 3/8.

* Ventilator maker Nellcor Puritan Bennett tumbled 5 3/4 to 18 after it reported disappointing results.

* Mafco Consolidated Group jumped 8 1/8 to 35 1/4 on news that its corporate parent, Mafco Holdings, offered to buy the 15% it did not already hold for $38.50 per share in cash.

Overseas, Tokyo’s Nikkei stock average fell 0.7%, Frankfurt’s DAX index fell 1.8%, and London’s FTSE-100 edged higher.

Market Roundup, D6