Stocks recoup some losses Dow up 9

WALL STREET

September 23, 1993|By Bloomberg Business News

NEW YORK -- U.S. stocks snapped back yesterday from a two-day plunge as calm returned to Russia and long-term interest rates declined.

Better-than-expected earnings from Oracle Systems Corp., a leading maker of computer software, also buoyed the market by easing some of the recent concern about U.S. corporate earnings, traders said.

"What's happening in Russia is going to have an impact, but interest rates and corporate earnings are the bigger concern," said Ken Ducey, head trader at BT Brokerage. "Oracle is certainly part of the equation" that helped stocks recover yesterday, he said.

The Dow Jones industrial average closed up 9.78, at 3,547.02. Tuesday, the average plunged 38.56 points, its biggest one-day decline since April 2, as Russian President Boris N. Yeltsin moved to disband the country's parliament and called for elections on Dec. 11 and 12.

Renewed tension in Russia exacerbated concern about the strength of U.S. companies' earnings and rising interest rates. The Dow industrials had shed 2.65 percent in four straight declines, with 2.1 percent, or 76.01 points, of that surrendered in the past two days.

"It seems like things in Russia aren't escalating as people expected yesterday, with all the talk flying around about troop movements," said Dale Tills, manager of institutional equities trading at Charles Schwab & Co.

The Russian army declared itself neutral in the standoff between Mr. Yeltsin and parliament. "The fact that it doesn't look like there's going to be any fighting right away will make people feel a little more comfortable," said Mr. Tills.

Russian legislators have been stonewalling Mr. Yeltsin's economic-reform plan for more than a year. Deputies named Vice President Aleksandr Rutskoi as acting head of state on Tuesday.

Broader market indexes did better than the Dow industrials.

The Standard & Poor's 500 Index soared 3.25, to 456.20,, more than recouping Tuesday's 2.1-point decline. Retail stores, semiconductors, financial services, beverages, autos, and software companies led yesterday's recovery.

The Nasdaq Combined Composite Index, which slumped 6.66 points Tuesday, rallied 11.98, to 745.54, paced by gains in Intel Corp. and Oracle.

Stocks got a boost from computer-guided buy orders that took effect about 3 p.m. EDT, the research firm Birinyi Associates Inc. said. The orders coincided with a government-bond rally that sent rates lower.

The yield on the benchmark 30-year bond dropped 4 basis points, to 6.09 percent. The record low of 5.84 percent was reached Sept. 8.

Advancers outnumbered decliners by a margin of 11-to-5 among common stocks on the New York Stock Exchange. Trading was unusually active, with about 286.8 million shares changing hands on the Big Board.

Pacing the rise in the Nasdaq, Oracle leapt $3.875, to $58.625, after the company reported first-quarter earnings more than tripled, surpassing analysts' estimates. Oracle set a new 52-week high of $59 yesterday.

Oracle's earnings lifted stocks of other database software companies.Sybase Inc. soared $5.625, to $62.625, and Informix Inc. surged $2.375, to $21.125.

Investors are "drifting into smaller names because people think there's more growth there," said David Shulman, chief strategist at Salomon Bros.

"People are worried about earnings disappointments in bigger names" in the aftermath of warnings about lower-than-expected earnings from Westinghouse Electric Corp., Eastman Kodak Co. and Nike Inc., Mr. Shulman said.

Drug stocks were little changed as investors turned their attention to President Clinton's proposal to overhaul the nation's $900 billion health-care system.

"People are anxious to buy the drug group and let the news get out of the way," said John Blair, head trader at NatWest Securities.

Merck & Co. closed unchanged, at $31.50, after rallying $1 Tuesday, when a Clinton aide said the administration would consider adjusting its formula for financing health care, and might phase in long-term care more slowly.

Investors took encouragement yesterday from a report showing short interest on the New York Stock Exchange was at a record level and, paradoxically, from a survey showing mounting pessimism among investors, traders said.

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