Small stocks rise, but Dow falls 14


January 21, 1993|By Bloomberg Business News

NEW YORK -- Stocks, except for those on the NASDAQ over-the-counter market, closed lower yesterday after General Electric and other leading companies reported disappointing earnings.

"Groups like electrical-equipment stocks, which rallied so much in recent weeks, backed off" yesterday, said James Solloway, a director at Argus Research.

The Dow Jones industrial average fell 14.04, to 3,241.95, after computer-driven sell orders helped send the Dow lower in the final two hours of trading.

Shares of General Electric and International Business Machines led the Dow's decline.

General Electric fell $1.50, to $82.625. The company reported full-year 1992 earnings of $4.7 billion, or $5.51 a share, up 8 percent from 1991 results but below some analysts' expectations.

IBM declined $1.50, to $46.875, after having posted the biggest annual loss in U.S. corporate history. IBM on Tuesday reported a loss of $4.97 billion in 1992, after having taken pretax restructuring charges of $11.6 billion.

The Standard & Poor's 500 index declined 1.76, to 433.37, led by a slide in stocks of electrical equipment and semiconductors. The NASDAQ index of smaller stocks gained 0.62, to 697.43.

Declining stocks outnumbered advancing issues by a margin of 8-to-7 on the New York Stock Exchange. Trading was active, with 270 million shares changing hands on the Big Board. The American Stock Exchange Market Value index rose 1.37, to 405.21.

One highlight in yesterday's market was the 1.8 percent advance by Standard & Poor's drug index.

"It's ironic drug stocks did so well on the same day Bill Clinton is inaugurated president," Mr. Solloway said.

Drug stocks have fallen about 14 percent in the past six weeks on concerns about cost controls that President Clinton may seek. Mr. Clinton has pledged to curb soaring health-care costs. The Commerce Department estimates that health care costs will rise 12 percent in fiscal 1993, to $940 billion.

Drug stocks got a boost from positive comments by Neil Sweig, an industry analyst at Capital Institutional Services, and from reports of strong sales of prescription drugs in December from several leading pharmaceutical manufacturers. Merck gained 50 cents, to $41.25; Pfizer rose $2.50, to $63.50; and Schering-Plough advanced $1.50, to $57.625.

NASDAQ stocks continue to advance at a faster pace than other indexes, on expectations that smaller companies will report better earnings growth, Mr. Harrington said.

"The divergence between the Dow and NASDAQ means the stock market is losing its strength," Mr. Harrington said.

"Investors would be wise to start selling stocks."

Tucson Electric Power declined 25 cents, to $3.25, after Kemper Securities reduced its rating on the stock to "hold," from "long-term buy." Tucson Electric has rallied since mid-December, when the company completed a restructuring program.

Citicorp surged $1.50, to $26, as the stock continued to rally after the release of robust fourth-quarter earnings. The nation's biggest bank reported earnings of $280 million, or 53 cents a share, compared with a loss of $133 million, or 53 cents, in the year-ago period.

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