Dow Breaks 8,800; Coffee Prices Sink

The stock market on Thursday turned a weak session into a winner by day’s end, pushing the Dow Jones industrials over yet another century mark.

The Dow added 27.65 points to a record 8,803.05, and most broad-market indexes also closed higher.

Meanwhile, in commodities trading, coffee prices sank to a 12-month low on expectations for a massive Brazilian crop.

On Wall Street, the market treaded water for much of the day, before a burst of buying lifted prices in the final two hours. Winners topped losers by 1,660 to 1,253 on the New York Stock Exchange.

Larry Wachtel, analyst at Prudential Securities, said “an ocean of liquidity” continues to buffer any possible downturn in stocks, even in the face of wage inflation and lower corporate earnings projections.

“This is simply an unrelenting bull market,” he said, “and where it ends, I really don’t know. Each time we pull back, people are conditioned to go in and buy.”

The Standard & Poor’s 500 index rose 4.22 points to a record 1,089.74, lifting its year-to-date gain to 12.3%.

The Nasdaq composite added 11.70 points to a record 1,799.98 and now is up 14.6% year-to-date.

The Dow, meanwhile, is up 11.3% this year.

Stocks didn’t show much reaction to the huge trade deficit the government reported for January, or to a consumer inflation report that was slightly higher than expected.

Bonds also were largely untroubled. Yields eased slightly, with the 30-year Treasury bond ending at 5.89%, down from 5.90% on Wednesday.

In the bond market, “people are expecting to see slower growth in the future, in part because of Asia,” said John Burgess, who oversees $70 billion of bonds at Bankers Trust Global Investment Management.

What the stock market expects is anyone’s guess. Corporate earnings are expected to rise just 1.7% this quarter, overall, for blue-chip companies. That would be the slowest pace since 1991.

Stock buyers are “in denial about what is going on with earnings,” said Chuck Hill, director of research at earnings-estimate tracker First Call.

But he also said many investors buying stocks today could simply be betting on higher earnings growth later this year.

The definition of a great bull market, many analysts note, is one that is able to turn even bad news into good news.

Elsewhere, in commodities trading, coffee fell to its lowest price in more than a year after Brazilian exporters forecast the country’s biggest crop since 1987, promising to swell already abundant supplies.

Near-term coffee futures in New York fell 3.6 cents to $1.423 a pound.

Silver also was lower, with near-term futures down 3.1 cents to $5.86 an ounce in New York.

Among Thursday’s highlights:

* Phone stocks were big winners on expectations for more consolidation in the industry. American depositary receipts of British Telecommunications, which last year was outbid by WorldCom for MCI, shot up $5.50 to $112 after the company said it may expand its presence in the U.S.

That helped pump up Bell Atlantic, which jumped $3 to $103; SBC Communications, up $1.94 to $83.75; GTE, up $1.13 to $57.69, and other phone issues.

* Energy stocks continued to rebound on hopes that oil-exporting companies will take steps soon to mop up the global glut of oil.

Mobil rose 81 cents to $75.38, Atlantic Richfield gained $1.88 to $78.19, Royal Dutch added $1 to $55 and Noble Affiliates rose $1.19 to $43.

* On the downside, Rockwell International plunged $6.06, or 10%, to $54.44 on the company’s warning that earnings for its second quarter will be below the 75 cents analysts expected. It blamed slowing sales and falling prices for modem semiconductors.

Also, Nike slid $2.31 to $43.81 after its dismal earnings report Wednesday.

* Tobacco shares fell on expectations that an Indiana jury would decide against the industry in a secondhand-smoke lawsuit. Philip Morris fell $1.06 to $41.38; Loews lost $1.63 to $104.38.

* America Online dropped $1.88 to $61.63 in heavy trading after Merrill Lynch downgraded it to “near-term neutral” from “accumulate.”

AOL is facing new competition from MCI and Yahoo’s new online service.