Stock market gains on 'good feeling' about economy

WALL STREET

December 01, 1992|By Bloomberg Business News

NEW YORK -- Expectations of a robust economy helped U.S. stocks advance for a fourth consecutive session. Stocks also received a boost from the overnight rally in European markets.

"Everybody has a good feeling about the economy, and the market reflects that," said Richard Meyer, head of institutional trading at Ladenburg, Thalmann & Co.

The Dow Jones industrial average rose 22.96, to close at 3305.16, led by International Business Machines Corp., which was recommended by an analyst at Smith Barney, Harris Upham & Co.

The gain in the Dow Jones industrial average outpaced the broader market averages for a fourth straight session. Still, the NASDAQ Combined Composite index and Standard & Poor's 500 closed at record levels. The NASDAQ composite gained 3.26, to 652.75, and Standard & Poor's 500 index increased 1.19, to 431.35.

Advancing common stocks outnumbered declining issues by about 9-to-5 on the New York Stock Exchange. Shares of computer, electrical equipment, international oil and retail stores were up the most.

"The Dow seems to be finally catching up with the other market averages," said Edward Collins, executive vice president at Daiwa Securities America.

The Dow Jones industrials average is up about 2.6 percent in the past week, while the NASDAQ composite and the S&P 500 are up less than 2 percent. Still, the NASDAQ Composite and S&P 500 are at all-time highs, while the Dow is about 3.3 percent below its all-time high of 3413.21, set June 1.

Yesterday's rise in U.S. stocks follows a 0.68 percent gain in Britain's FT-SE 100 index, to a record close of 2778.8. The rally was fueled by reports that November money supply increased at an annual rate of 3 percent. Meanwhile, France's CAC 40 index rose 1.24 percent and Germany's DAX index added 1.40 percent.

"There's no question that the advance in U.S. stocks was spurred by what happened overnight in Europe," Mr. Collins said.

On the economic front, investors received more positive news. The Purchasing Management Association of Chicago said manufacturing activity increased in November. Meanwhile, retail stores are reporting strong sales in the first few days of the Christmas selling season.

"The economy is definitely gaining momentum, and so is the stock market," Mr. Collins said.

Texas Utilities Co., Blockbuster Entertainment Corp., Comptronix Corp., Syntex Corp. and IBM were the five most actively traded issues on the U.S. Composite.

Texas Utilities, which goes ex-dividend tomorrow, continued to see active trading of its stock as investors seek to capture the next dividend payment. Texas Utilities advanced 25 cents, to $42.75.

Blockbuster rose 50 cents, to $17.50. Shamrock Holdings, controlled by investor Roy Disney, sold 3.13 million Blockbuster shares yesterday for about $53.6 million. Shamrock acquired about 4.14 million Blockbuster shares as payment for two retailing record chains it sold to Blockbuster. Shamrock plans to sell the remaining shares in the next few days.

Syntex declined 75 cents, to $22, on continued concerns about sluggish earnings. Analysts reduced earnings estimates after Syntex reported a fiscal first-quarter loss of $6.1 million, or 3 cents a share, compared with net income of $132 million, or 59 cents a share, in the same period last year. An analyst at Morgan Stanley repeated his "avoid" rating on Syntex's stock yesterday.

Comptronix rose 37.5 cents, to $8.75, on NASDAQ volume of almost 3.5 million shares in a continued rebound from last week's plunge.

Comptronix tumbled last Wednesday when the company said it formed a panel to investigate allegations that three senior officers overstated profits and misreported results.

IBM rallied $2.25, to $68.25, on reports that sales of the company's new personal computers were exceeding expectations. An analyst at Smith Barney, Harris Upham & Co. raised his rating on IBM's stock to "speculative buy."

Amdahl Corp. fell 87.5, cents to $7, after Lehman Brothers advised investors to sell the stock.

Glaxo Holdings Plc slid 25 cents, to $24, amid concerns about a European patent decision that puts SmithKline Beecham Corp. in a position to collect royalties from Glaxo over the companies' competing anti-nausea drugs.

General Motors Corp. gained 50 cents, to $32.125. Aviation Week & Space Technology reported the automaker may sell some key aerospace and defense electronics businesses as it revamps its auto business.

Nike Inc. declined $1.375, to $86.25, after the stock was removed from the "buy" list at Lehman Brothers. The stock was lowered to an "outperform" rating.

Student Loan Marketing Association fell $3.50, to $66.25. An analyst at Morgan Stanley cut his rating on the stock to "hold" from "buy."

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