Rally in Kodak lifts stocks Dow up 11

WALL STREET

August 07, 1993|By Bloomberg Business News

NEW YORK -- Stocks closed higher yesterday, buoyed by a rally in shares of Eastman Kodak and by expectations that the Senate would approve President Clinton's compromise budget package.

The Dow Jones industrial average rose 11.46 points, to 3,560.43, closing the week with a gain of 20.96 points. Kodak, which soared $3.25, to $58.625, on the company board's decision to replace Kodak's chairman, Kay Whitmore, accounted for about 8 points of the Dow's increase. The Dow stands a few points below its record closing high of 3,567.70, reached July 26.

Broader market indexes also gained. The Standard & Poor's 500 Index added 0.55, to 448.68, and the Nasdaq Combined Composite Index advanced 2.58, to a record 718.08, its third consecutive high.

Prospects for passage of the budget package grew yesterday after the Senate rejected a Republican attempt to derail the package on the ground that the plan's retroactive tax increases were unconstitutional.

"The market has effectively been put on hold until the outcome of the Clinton economic plan," said Hugh A. Johnson, senior vice president of First Albany Corp. "But there was moderately good news on the employment front."

Advancing stocks on the New York Stock Exchange exceeded declining issues by a margin of about 8-to-7. Trading was moderate, with about 221 million shares changing hands.

Stocks also got a mild boost from a report that the nation's unemployment rate fell last month and from surges in leading European equity markets. The gain in jobs in July was consistent with economists' expectations and assured investors that the Federal Reserve Board would not raise interest rates soon.

"Interest rates will be low whether the budget plan goes through or not," said Henry Otto, a managing director at Brandywine Asset Management, who manages about $150 million. "Inflation is very low, and economic activity is not robust."

Share prices soared on major European exchanges amid strong corporate earnings and expectations of further interest-rate cuts stemming from the near-collapse of Europe's exchange-rate system.

Britain's FT-SE 100 jumped 26.4, to a record 2,969.8. France's CAC 40 jumped 34.53, to 2,149.83. Germany's DAX index rose 8.68, to a 1993 high of 1,869.38.

The board of Kodak, the photographic film and drug company, said it would replace Mr. Whitmore amid pressure from shareholders to accelerate the company's turnaround.

Mr. Whitmore's ouster prompted analysts at Lehman Bros. and Prudential Securities to turn bullish on Kodak's stock.

International oil issues, led by Mobil Corp., paced the gain in the S&P 500. Mobil rose $1.50, to $72.625, after an analyst at Morgan Stanley raised his rating of the company's stock to "buy," from "hold."

Auto stocks fell after Ford Motor Co. announced a recall of 15,000 Escorts because of emission problems, and the Environmental Protection Agency suggested boosting fuel-efficiency standards.

General Motors Corp. fell 87.5 cents, to $47.75; Ford dropped $1, to $51.625; and Chrysler Corp. lost $1, to $41.875.

GEICO Corp. soared $2.625, to $52.625. The insurance company reported second-quarter earnings of $1.18 a share, compared with 92 cents, on a 6.9 percent rise in revenue.

The New York Times News Service contributed to this article.

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