Technology rally helps Nasdaq reach record high Investors' mood buoyed by buyout, takeover moves

WALL STREET

September 24, 1993|By Bloomberg Business News

NEW YORK -- A rally in technology and retail shares helped push over-the-counter stocks to a record high yesterday, while declining interest rates kept the rest of the U.S. market stable.

The stock market stayed relatively buoyant even as concern mounted over turmoil in Russia and the impact of President Clinton's health care reform plan, said Martin Jaffe, chief investment officer at Wood, Struthers and Winthrop Management.

Yesterday's performance was "a surprise," he said, while

investors' ability to shake off potentially negative news was "positive."

The Dow Jones industrial average declined 7.27, to 3,539.75, after falling as low as 3,530.70, led by a drop in Eastman Kodak Co. amid reports that its Sterling Drug unit planned to cut aspirin prices by 25 percent to win back market share from private labels.

The Dow Industrials rose 9.78 Wednesday as calm returned to Russia after President Boris N. Yeltsin dissolved Parliament and called for new elections in December.

Broader market averages moved up, though, and the Nasdaq Combined Composite Index rose 6.72, to hit an all-time high of 752.26, spurred by gains in Intel Corp., Microsoft Corp. and Amgen Inc. Standard & Poor's 500 Index was up 1.54, at 457.74.

Advancing common stocks outnumbered declining stocks on the New York Stock Exchange by about 9-to-7 and on Nasdaq by 4-to-3. New York Stock Exchange volume was active as 275 million shares changed hands.

Investors are looking at the market company-by-company rather than expecting a broad-based advance, "but the mood has been buoyed" by competing takeover offers for Paramount Communications Inc. and by Primerica Corp.'s plan to buy the Travelers Corp., Mr. Jaffe said.

Mr. Clinton's speech on reforming the health care system prompted investors in many health maintenance organization and drug stocks to breathe "a sigh of relief" because it contained so few details, said Todd Clark, head of trading at Mabon Securities Corp.

The biggest gainers among pharmaceutical issues yesterday came in stocks with many promising drugs in development, Mr. Jaffe said. Other drug companies were likely to see the price of their existing drugs slide, he said. Pfizer Inc. rose $2.25, to $62.625; Schering-Plough climbed $2, to $65.25; and Abbott Laboratories advanced $1, to $27.

Among health maintenance organizations, U.S. Healthcare Inc. increased $3.375, to $49.125; United Healthcare Corp. was $3.375 higher, at $64.125; and Pacificare Health Systems Inc. gained $1.25, to $32.50.

Healthcare Compare Corp., a cost-management company that cuts employers' health costs, rose $1.125, to $18.125.

In one sign of the industry's consolidation, Valued Health Inc., down $1.75, at $34, agreed to buy Preferred Health Care Ltd., up $6.875, to $27.875, for stock valued at about $425 million. The merger would create the nation's largest provider of managed mental-health and substance-abuse programs.

Mr. Clinton wasn't specific about how to finance his reforms. As expected, he said Americans would be asked to pay as much as $105 billion in new "sin" taxes, including a tax on tobacco. Philip Morris Cos., the nation's biggest cigarette maker, rose 12.5 cents, to $46.50.

"There'll be more pressure on the insurance companies than on the pharmaceutical industry," said Alan Ackerman, executive vice president at Reich & Co. "Little was said about pharmaceuticals, but clearly there will be caps in insurance premiums."

The only new taxes mentioned in the speech were levies on payrolls and tobacco, "but it's going to require over $350 billion over five years, and that's worrisome," Mr. Ackerman said.

"It's a big burden for the economy at the moment, and it's a major change in the social fabric of the country."

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