Stocks increase broadly Dow up 3.24

WALL STREET

January 16, 1993|By Bloomberg Business News

NEW YORK -- Stock prices rose yesterday as the market absorbed a late bout of computer-driven sell orders related to options expiration.

The Dow Jones industrial average rose 3.24, to 3,271.12, as a gain in Caterpillar offset declines in Philip Morris and Westinghouse Electric. The Dow ended the week with a gain of 19.45 points.

Among broader market averages, the Standard & Poor's 500 gained 1.22, to 437.16. The NASDAQ index of smaller stocks TC climbed 1.45, to a record 697.15. The over-the-counter market rose on gains in cable, health-care and telecommunications stocks as the red-hot computer group cooled off.

"The word out [yesterday] morning was to buy" in anticipation of the usual market surge accompanying an options expiration, said Thomas Gallagher, managing director at Oppenheimer & Co. "When the [late-order] indications came in, they were a little disappointing."

Order imbalances reported by the New York Stock Exchange in the final hour showed that the number of shares investors were trying to unload outweighed demand for stocks.

Still, advancing stocks exceeded declining issues by a margin of 2-to-1 on the New York Stock Exchange. Trading, swelled by the options expiration, was extremely active, with 306 million shares changing hands.

The market's late turnaround blunted rallies in shares of automakers, railroads and other companies whose earnings stand to benefit the most as the economy recovers.

"People are moving out of technology and into these" recovery-driven stocks, said Richard Meyer, a director at Ladenburg, Thalmann & Co.

Investors often take advantage of high trading volume on expiration days to shift money among industries, said Thomas McManus, a vice president at Morgan Stanley.

The Dow Jones transportation average rose 9.87, to 1,506.21, after having surged 29.41 points Thursday. The Morgan Stanley cyclical index, which measures the performance of 30 stocks, gained 2.23, to 249.29. The cyclical index outpaced the Morgan Stanley consumer index, which rose just 0.33, to 202.90.

"This divergence between these indexes continue the trend that started in early October," Morgan Stanley's Mr. McManus said. "The stock market is forecasting a stronger recovery, and right now things appear to be on track."

Caterpillar rose $1.25, to $56.75, after the Wall Street Journal reported that the Midwest could benefit the most from the North American Free Trade Agreement, contrary to fears that the agreement would cause widespread job losses among industrial companies. Caterpillar and other companies have enjoyed a surge in demand for its products from the development of the Mexican infrastructure and capital spending.

General Motors rose 62.5 cents, to $34.625; Ford climbed $1.25, to $46; and Chrysler rose $1.375, to $36.375.

Stocks climbed steadily after good news on inflation. The Labor Department said inflation rose 2.9 percent last year, the lowest rate in six years. The consumer price index rose 0.1 percent in December. The inflation report triggered a surge in Treasury bonds, pushing the yield on the 30-year bond down 6 basis points, to 7.34 percent. Lower bond yields tend to make stocks appear more attractive than fixed-income investments.

Apple Computer slumped $4.75, to $60.25, as price wars among personal-computer makers pushed the company's fiscal first-quarter earnings down 2.8 percent.

Intel dropped $1, to $111.75, falling from Thursday's all-time high.

Microsoft fell $1.50, to $89.75, after the company reported fiscal second-quarter earnings that were strong by any standards but its own record of growth.

Westinghouse Electric Corp. lost $1, to $13.75, after the termination of talks to sell part of its credit unit to GE Capital Corp., the finance subsidiary of General Electric. GE Capital said it ended talks about acquiring some assets of Westinghouse Credit Corp but did not say why.

The Arms index, a measure of the views of traders and investors, finished at 1.15. A reading above 1 is considered bearish, below 1 bullish.

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