NASDAQ, T-bond rallies lift stocks

WALL STREET

November 10, 1992|By Bloomberg Business News

NEW YORK -- U.S. stocks advanced yesterday, led by a continued rally in NASDAQ issues and a rebound in Treasury bond prices.

The Dow Jones industrial average rose 0.81, to close at 3240.87. Shares of International Business Machines Corp. and Walt Disney Co. accounted for the gain.

The NASDAQ Combined Composite index soared 5.23, or about 0.85 percent, to 622.05 led by a rally in Amgen Inc., U.S. Healthcare Inc., Medco Containment Services Inc. and Sigma-Aldrich. The NASDAQ composite is up 12.1 percent since late August.

Strong third-quarter results, an improving economy and hopes that President-elect Bill Clinton will push through legislation that promotes faster earnings growth are fueling the NASDAQ's gain, traders said.

Advancing common stocks outnumbered declining issues by about 8-to-7 on the New York Stock Exchange. Trading was active, with about 198 million shares changing hands on the Big Board. Standard & Poor's 500 index rose 1.01, to 418.59.

"The bond market is holding steady after falling so much over the past several weeks, and that gave the stock market a boost," said Richard Meyer, head of equity trading at Ladenburg, Thalmann & Co.

Treasury bond prices rose despite the news of anemic demand at the first leg of the Treasury's $37 billion quarterly refunding -- the sale of $15.5 billion in three-year notes yesterday. The yield on the 30-year bond was recently at 7.75 percent.

Medco Containment, Storage Technology Corp., L.A. Entertainment Inc., Amgen Inc. and Food Lion Inc. were the five most actively traded stocks on the U.S. Composite.

StorageTek plunged $8.125, to $23.625, after the company said for the third time this year that delivery of its "Iceberg" data storage product will be delayed. StorageTek, the most actively traded U.S. stock, dropped as much as 31 percent, to a low of $22. This puts the shares just above the 52-week low of $21, set Oct. 15 when the company reported an 83 percent plunge in third-quarter earnings. They are 72 percent below the 52-week high of $78 reached Feb. 5.

Medco Containment climbed $1.375, to $33.625, after the company said it is reevaluating its merger agreement with Diagnostek Inc. and indicated that it might reduce the amount of stock given to Diagnostek shareholders. Diagnostek revised its latest fiscal first-quarter earnings to 11 cents a share from the originally reported 15 cents, and reduced its second-quarter earnings expectations. Diagnostek fell $6.875, to $9.

L.A. Entertainment gained 6.25 cents, to 34.375 cents, in the wake of last Thursday's announcement that the company purchased a majority stake in American Blood Institute for $1.1 ,, million.

Food Lion dropped another 50 cents, to $7.75, after the Wall Street Journal said the Labor Department is investigating the company for about 1,400 alleged violations of child-labor laws. The stock was battered Friday after ABC News's "PrimeTime Live" program Thursday night reported that workers at several of the grocery chain's stores habitually repackaged spoiled food for sale and that food preparation sites were not sanitary. Food Lion denied the program's allegations and said it hasn't received details of the Labor Department's investigation.

Amgen rose $2.625, to $68.875, amid a rally in biotechnology shares. Biogen Inc. rose $2.50, to $44.75, on about 1.5 million shares changing hands.

Disney advanced 75 cents, to $40.875.

Chevron Corp. increased 50 cents, to $67.25, on reports that the company plans to cut operating costs by about $200 million.

Medex Inc. slumped $7.25, to $14, after the company's release ** of lower-than-expected earnings. Medex, based in Hilliard, Ohio, said net income dropped 27 percent in the first fiscal quarter, to $987,000, or 18 cents a share, from $1.35 million, or 24 cents a share, last year. Medex said the decline in first-quarter earnings stems from a delay in German government approval of plans to market a new syringe pump, higher marketing and development costs and difficult currency translations.

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