Optimism on rates lifts stocks a bit Dow up 1.39

WALL STREET

June 10, 1993|By Bloomberg Business News

NEW YORK -- Stocks eked out small gains yesterday a optimism about a decline in long-term interest rates gave the market a boost.

The gains in stocks were constrained by lingering concern about inflation and the strength of corporate profits from leading companies like Apple Computer Corp.

The Dow Jones industrial average gained for the first time in three trading sessions, rising 1.39 points, to 3,511.93. But the Dow closed below its session high of 3,530.75 after a late-day slide led by declines in Philip Morris Cos. and Caterpillar Inc.

"The market tried to snap back from several days in a row of declines," said Thomas Heck, senior vice president in equity trading at Mabon Securities. "The market's efforts failed as concern about earnings and inflation remains."

The Standard & Poor's 500 Stock Index gained 1.07, to 445.78, while the American Stock Exchange's Market Value Index fell 0.82, to 436.36. The Nasdaq Combined Composite Index rose 1.50, to 689.24.

Apple Computer plunged $5.25, or 10.6 percent, to $44.25, after the company said earnings in the second half of its fiscal year would be below the year-earlier level.

"Apple is in a precarious position," said Walter Winnitzki, an analyst at Dillon, Read & Co. "The market is saying 'no' to Apple's model," and Apple "is reacting by saying the company has to go for market share rather than profits."

The decline in Apple's stock spilled over into other computer issues. Compaq Computer Corp. declined $4.375, to $53.75, after the stock was removed from the "buy" list at Prudential Securities Inc. Dell Computer fell 75 cents, to $20.

The slide in computer stocks was offset by gains in shares of international oil, regional banks and health care stocks. Advancing stocks on the New York Stock Exchange exceeded declining issues by about 7-to-6. Trading was active, with about 249 million shares changing hands.

Stocks received a lift from a big drop in long-term interest rates. The yield on the 30-year Treasury bond fell 5 basis points, to 6.87 percent, the lowest level in almost a month.

Interest rates fell after an economic adviser to President Clinton, Robert E. Rubin, said that low interest rates would mean larger reductions in the federal budget deficit than had been envisioned. Mr. Rubin also hinted that concern about inflation might be overblown, said John Blair of NatWest Securities.

The Labor Department will issue one of two key inflation reports Friday, when producer prices for May are to be released. Economists estimate that producer prices rose 0.1 percent last month.

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