Dow up 25 as commodity price index falls MARKETS


July 08, 1993|By Bloomberg Business News

NEW YORK -- U.S. stocks gained yesterday as the Commodity Research Bureau's price index declined, easing inflation jitters.

The Dow Jones industrial average advanced 25.74, to 3,475.67, ending a five-session streak of losses that started June 28. The average's gain was led by shares of Caterpillar Inc. and Sears, Roebuck & Co.

"The CRB declined, and that alleviated some of the overhanging concern about inflation," said Edward Collins, executive vice president of institutional trading at Daiwa Securities America. "But I'm not sure how long it's going to last."

A plunge in Microsoft Corp. shares -- triggered by a Goldman, Sachs & Co. analyst raising concern about potential product delays -- depressed prices in the Nasdaq market. The Nasdaq Combined Composite Index fell 3.43, to 698.79.

Microsoft accounted for much of the index's decline. The stock slumped $2.625, to $83.375, after the Goldman Sachs analyst, Richard Sherlund, said delays in the new Word word-processing and Excel spreadsheet software programs might clip earnings this year.

Standard & Poor's 500 Index gained 1.40, to 442.83, and the American Stock Exchange's Market Value Index fell 1.98, to 431.79. Advancing common stocks led declining issues by about 10-to-9 on the New York Stock Exchange.

The Dow Jones transportation average, skidding for a second straight session, fell 28.78, to 1,499.29, led by Airborne Freight Corp. Airborne Freight plunged $3.50, to $21.625, after a Robinson Humphrey analyst cut his short-term rating to "hold" from "buy."

"I don't think the strength in the Dow and S&P 500 is going to last," said Thomas Gallagher, managing director in charge of capital commitment at Oppenheimer & Co. "There is just too much concern out there about inflation and the economy."

Stock and bond prices tumbled Tuesday as the Commodity Research Bureau's index, an inflation gauge, jumped to a 21-month high, driven by a surge in soybean and grain prices amid concern about heavy rainfall and flooding along the Mississippi River reducing harvests. Surges in gold and oil prices added to the concern about inflation.

Yesterday, the CRB futures price index declined 0.02, to 217.28.

"I think people are starting to realize that weather is a nonrecurring factor that won't have a long-term effect on commodity prices," said Robert Robbins, market strategist at Robinson-Humphrey. "The concern about inflation is completely overblown."

The 30-year Treasury bond was little changed, to yield 6.67 percent, down 1 basis point. Tuesday, the yield fell to a record 6.625 percent.

Trading on the Big Board was active, with about 252 million shares changing hands.

Sequent Computer Systems Inc., Sunshine Mining Co., Microsoft, Intel Corp. and Mesa Airlines Inc. were the most actively traded stocks on the U.S. Composite.

Sequent Computer Systems fell $5, to $11.75. The computer company expects to report break-even second-quarter results, compared with net income of 12 cents a share. Analysts were estimating the company would earn 21 cents a share, according to Zacks Investment Research.

Mesa Airlines Inc. slumped $2.50, to $18.50. The company said it expects third-quarter earnings to be closer to 25 to 26 cents a share, or below the high end of analysts' estimates of 30 to 31 cents, because of weaker-than-expected demand in the Denver region. The estimates prompted a First Boston analyst to cut his earnings projection.

Sears gained $1.875, to $56.125, after an analyst at Salomon Bros. raised his investment rating to "buy" from "hold."

Arbor Drugs Inc. fell $4.875, to $15.875. The drug-store operator said Blue Cross of Michigan is seeking more than $17 million from Arbor to settle claims that it overcharged the insurer.

Mueller Industries Inc. slumped $5.375, to $28.625. George Soros' Quantum Fund N.V. filed to sell a 33.6 percent holding in the metals fabricator.

Merrill Lynch & Co. gained $3, to $82.875. The investment bank is expanding commercial banking services to attract customers for the company's traditional financial services, the Wall Street Journal reported.

Copytele Inc. soared $4.75, to $18.375. Japan's Sumitomo Chemical Co. extended an agreement with the electronics company to further develop a special technology used to enhance imaging display.

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