Dow up 2.17 despite signs economy may be sagging

WALL STREET

March 31, 1993|By Bloomberg Business News

NEW YORK -- U.S. stocks closed higher yesterday as a rally in shares of drug manufacturers offset more signs that consumer confidence is declining and the economy is sagging.

"Health care stocks surged, and that gave the entire market a boost," said John Blair, head trader at NatWest Securities.

After spending most of the day in negative territory, the Dow Jones industrial average closed 2.17 higher, at 3,457.27. The index gained despite declines in Aluminum Co. of America, International Business Machines Corp., and Eastman Kodak Co. Alcoa fell $2, to $65.875, and Kodak slumped $1, to $53.50, on concern about the earnings outlook, while IBM fell $1.75, to $50, on rumors the giant computer maker might cut its dividend again.

Standard & Poor's 500 Index rose 1.20, to 451.97, and the American Stock Exchange Market Value Index gained 0.37, to 419.68. Advancing common stocks led declining issues by 8-to-7 on the New York Stock Exchange. Shares of retail, automobile and food companies fell the most.

The Nasdaq Combined Composite Index, the only major stock market average to rise, climbed 5.49, to 686.25. The index's gain was led by bellwether stocks such as Microsoft Corp., Intel Corp. and Amgen Inc. These stocks rallied following positive comments from analysts at First Boston Corp. and Dillon, Read & Co.

Drug stocks surged after Health and Human Services Secretary Donna Shalala said price controls weren't definitely part of the Clinton administration's plan to revise the nation's health care system.

Abbott Laboratories rose $1.50, to $26; Johnson & Johnson surged $1.75, to $41.875; Bristol-Myers Squibb gained $1.25, to $59.50; American Home Products increased $1.25, to $65.625; Merck rose $1.25, to $35.50; Schering-Plough rose $1.875, to $60.375; and Pfizer Inc. soared $2.50, to $62.50.

The latest economic concern was prompted by the Conference Board's report that consumer confidence fell 6 points in March, to 62.6, from 68.5 in February. It was the third straight month that consumer confidence dropped.

The report indicated that the surge in confidence after President Clinton's election was giving way to the realization that unemployment remained high, analysts said.

"While the official economic readings are still indecisive, the rather abrupt change in consumer confidence suggests that the much-awaited economic recovery, which appeared in progress in November and December, may have lost some of its thrust," said Fabian Linden, executive director for the Conference Board's Consumer Research Center.

Separately, Johnson Redbook Service said retail sales slipped at a projected rate of 0.8 percent in March from February, as sales were hurt by the recent blizzard that hit the East Coast.

Retail stocks fell after release of the report.

Treasury bond yields rose yesterday putting some pressure on the stock market. The benchmark 30-year bond fell 7/32, or $2.19 per $1,000, to yield 6.91 percent.

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