WALL Street stocks reached new highs yesterday, but IBM dragged down the Dow Jones industrial average after disappointment that it did not report the same robust profits position as other computer giants.

The Dow dropped 33.87 points to close at 6,850.03, but would have shown a gain on the day if not for IBM's plunge. The loss snapped a string of four straight record closes for the blue chip index, which on Tuesday nearly hit 6,900 for the first time.

The focus of the day was IBM's fourth quarter results, reported after Tuesday's close. The computer maker's profits grew 18.3 per cent, beating many projections, but revenue growth failed to meet expectations and profit margins fell, prompting several leading brokerages to lower their investment ratings and earnings estimates.

Declines outnumbered advances by a 10 to 9 margin on the New York Stock Exchange, with 1,215 up, 1,334 down and 797 unchanged.