Stocks Largely Unfazed by Profit News

Boeing and AlliedSignal spoiled this week’s stream of reassuring profit reports, but stocks suffered only minor losses Wednesday as the overall trend remained positive.

The Dow Jones industrial average fell 25.79 points to 8,034.65, after nearly turning higher during the final hour. Without a steep decline by Boeing and AlliedSignal, the Dow would have finished with a slight gain, extending its speedy recovery from last week’s sell-off.

The overnight plunge of 6% in Hong Kong’s Hang Seng index, which helped pushed European markets lower, was also felt on Wall Street.

Most broad market measures also paused in this week’s rebound, which was triggered by strong third-quarter reports from several key technology and banking companies.

On Wednesday, 3M and United Technologies also stepped forward with better-than-expected results for the July-September period.

Boeing, however, startled investors by disclosing that the well-publicized bottlenecks at its overburdened factories have left the aerospace giant with an unexpected loss for the third quarter.

AlliedSignal, meanwhile, reported a third-quarter profit that was only a shade below Wall Street forecasts, but it was the first time in recent memory that the maker of aerospace, automotive and chemical products had come up short.

“AlliedSignal is a very predictable company, and it’s the first time in six years that they’ve missed an estimate,” said Thom Brown, market strategist for Philadelphia-based Rutherford, Brown & Catherwood. He called Boeing’s situation an “aberration” rather than a long-term concern. “It’s a nice position to be in where you’re so busy you can’t get parts.”

Boeing, which also said its earnings will be hurt next year because of problems keeping up with its booming orders for airplanes, fell $4.13 to $49.88 as the Dow’s biggest decliner, followed by AlliedSignal, which sank $3.25 to $40.25.

But 3M rose $5.75 to $100.38, United Technologies rose 69 cents to $79.81 and DuPont rose $1.44 to $59.63, despite reporting slightly disappointing results, helping tocushion the Dow’s fall.

And unlike the widespread selling spurred by last week’s profit disappointments from leading names such as Intel and Merck, the reverberations over Boeing and AlliedSignal were hardly perceptible in the broad market. The Standard & Poor’s 500-stock index fell 3.79 points to 968.49, and the Nasdaq composite index fell 4.46 points to 1,708.08.

Still, Wednesday’s downturn served as yet another roadblock in the blue-chip sector’s struggle to fully recover from its summer downturn. The Dow peaked at 8,259.31 on Aug. 6.

“This is a market that’s full of crosscurrents and riptides, and every time it tries to swim upstream, it pulls back,” Brown said.

Overseas, Tokyo’s Nikkei stock average rose 2.8%, Frankfurt’s DAX index rose 0.8% and London’s FTSE-100 fell 1.5%, its steepest decline in about two months as plunging Hong Kong shares shook an already jittery market.

The dollar finished lower against the German mark, pulled down by weakness in U.S. bond and stock markets and a report that a Federal Reserve Board official said the dollar had reached its highs for now. Caution ahead of today’s meeting of the Bundesbank’s policymaking Central Bank Council, which raised rates last week, also weighed on the dollar.

The dollar recovered from its afternoon low against the German mark but finished the day in New York at 1.7868 marks, down from 1.7896 marks on Tuesday.

Oil prices closed sharply higher after a surprising drop in U.S. petroleum stocks and renewed fighting between Kurdish factions in northern Iraq sparked concern about supplies. At the New York Mercantile Exchange, crude oil for December delivery closed 56 cents higher at $21.42 a barrel.

Market Roundup, D8