Stocks end slide as IBM, Philip Morris rebound

WALL STREET

December 18, 1992|By Bloomberg Business News

NEW YORK -- U.S. stocks recovered from a six-session slump yesterday, led by a turnaround in International Business Machines Corp. and Philip Morris Cos.

"There are a lot of holes in this market, but stocks such as IBM and Philip Morris seem to have stopped going down for the moment," said John Blair, head trader at County NatWest Securities.

The Dow Jones industrial average rose 14.05 to 3269.23. Shares of IBM, Philip Morris and General Electric accounted for much of the advance.

The NASDAQ Combined Composite index rallied 8.83 to 658.46, led by soaring computer stocks. Standard & Poor's 500 index rose 3.91 to 435.43 and the American Stock Exchange Market Value index increased 1.12 to 390.42.

Advancing common stocks outnumbered declining issues by about 9 to 5 on the New York Stock Exchange. Trading was

active, with about 250 million shares changing hands on the Big Board. Much of the trading was tied to today's quarterly expiration of stock and stock-index options and index futures contracts.

"People are maneuvering positions ahead of the expiration," Mr. Blair said. The so-called "triple-witching" expiration typically adds volatility to the stock market as investors close out options and futures positions. Computer-driven buy orders contributed to yesterday's stock market advance, traders said.

U.S. stocks received a boost from some positive economic news. The Commerce Department said the merchandise trade deficit narrowed 18.0 percent in October to $7.032 billion on record exports.

U.S. stocks also got a lift from beaten-up stocks such as IBM and Philip Morris. IBM gained $1.125, to $53, after losing 17.5 percent of its market value in the past two days. The stock hit an 11-year low Wednesday. The big drop stems from IBM's announcement that it will take a $6 billion charge against fourth-quarter earnings cut about 25,000 jobs and consolidate manufacturing.

Other computer stocks also rallied. Intel gained $3, to $86.50, after rallying $6.125 Wednesday. Advanced Micro Devices rose $1.375, to $18, Microsoft gained $3, to $90, Apple Computer increased $1.875, to $56.875, and Applied Materials surged $3.50, to $36.50.

Philip Morris rose 62.5 cents, to $76.875. Several analysts repeated buy recommendations on the stock. Shares of Philip Morris fell in recent sessions amid concerns about the company's earnings outlook. Specifically, some analysts say Philip Morris's domestic tobacco business was having problems consumer demand shifts away from brand-name products.

General Electric surged $1.875, to $85.375. The company received a $380 million contract to build power plants in Mexico, Algeria and Japan.

The five most actively traded issues were Tuscon Electric Power Co., IBM, Intel, Novell Inc. and Hayes Wheels International.

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