IBM's blues depress stocks Dow off 18

WALL STREET

January 20, 1993|By Bloomberg Business News

NEW YORK -- Stock prices closed lower yesterday after International Business Machines Corp. reported the biggest loss in its 79-year history.

In contrast to IBM, several large banks, including Citicorp, reported strong fourth-quarter results, starting a stampede into bank stocks.

The Dow Jones industrial average fell 18.92, to 3255.99, led by declines in Goodyear Tire & Rubber,IBM, Coca-Cola and Philip Morris Cos. The index recovered from an early slump, only to tumble again toward the end of the session.

"If you take out IBM, Philip Morris, and the oils, that's most of the damage right there," said Jim Benning, a trader at BT Brokerage. "Banks are all up."

Advancing stocks narrowly out paced decliners among common stocks on the New York Stock Exchange. Trading was unusually active, with more than 285 million shares changing hands on the Big Board.

Broader market averages ended with narrow losses. The Standard & Poor's 500 fell 1.71, to 435.13. The NASDAQ Combined Composite index, coming off a record high, slipped 1.32, to 696.81.

"What you're seeing is the leadership passing to the smaller stocks," said Mr. Benning of BT Brokerage. "The Dow Jones average isn't everything."

Nonetheless, IBM set a grim tone for the market early, when the computer maker reported the worst yearly performance in its history. IBM incurred a 1992 loss of $4.96 billion, or $8.70 a share, on restructuring charges and declining sales.

The pessimism generated by IBM's results was countered somewhat by strong earnings from Citicorp, Chemical Banking Corp., Wells Fargo & Co., Banc One and First Interstate, among others. Bank earnings "look fabulous," said Edward Collins, executive vice president at Daiwa Securities America.

Citicorp rose $1, to $24.625, and Chemical Banking rose 37.5 cents, to $41.625. Wells Fargo soared $13, to $99, driven by a flurry of short-covering, traders said.

GM rose $1.125, to $36.625; Ford Motor Co. went up 75 cents, to $47.375, and Chrysler Corp. climbed $1, to $38.50. An analyst at Bear, Stearns & Co. recommended purchase of the car stocks.

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