Stocks gain after good news from Chrysler, banks

January 19, 1994|By Bloomberg Business News

NEW YORK -- U.S. stocks gained yesterday as Chrysler Corp. and leading banks reported strong quarterly earnings and interest rates fell.

"People have seen what amounts to very favorable earnings reports," and the bond market has not reacted negatively to signs of economic strength, said Joseph DeMarco, managing director of equity trading at Marinvest, a unit of HSBC Asset Management with $4.5 billion in assets.

The Dow Jones industrial average closed unchanged, at 3,870.29, after rising for most of the day, as losses in Goodyear Tire & Rubber Co., Eastman Kodak Co. and American Express Co. offset gains in International Paper Co., General Motors Corp. and General Electric Co.

In the broader market, the Nasdaq Combined Composite Index added 0.84, to 793.02, breaking Friday's record of 792.31.

The Standard & Poor's 500 Index advanced 0.95, to 474.25, near the record 475.27 set Jan. 10. Telephone, automobile, electrical equipment, drug and semiconductor stocks were the biggest stock market winners. More than five stocks rose for every four that fell on the New York Stock Exchange.

U.S. Treasury bonds gained for the first time in four sessions as commodity prices declined, dampening concern about rising inflation. The benchmark 30-year bond rose 17/32, to yield 6.26 percent, down from 6.30 percent Monday.

Unexpectedly strong earnings from Chrysler Corp., which said fourth-quarter net income surged to $2.11 a share from $1.12 a share a year ago, raised expectations that Ford Motor Co. and GM will also post better-than-expected profits.

All three U.S. automakers reached 52-week highs. Chrysler rose 62.5 cents, to $62.375; Ford added 25 cents, to $68.625; and GM gained $1.375, to $62.125.

"You had a blowout quarter come out of Chrysler, and that helped cyclicals, certainly those that are auto-related," said Philip Orlando, an equity portfolio manager at First Capital Advisers.

Investors say automakers' earnings are important because they give insight into the strength of the economic recovery.

Many of the country's largest banks reported large earnings increases, although most saw their share prices retreat after recent rallies.

"Investors are concerned about the Federal Reserve increasing rates over the next few quarters, and that's created an artificial black cloud or ceiling over financial stocks," said Mr. Orlando of First Capital.

NationsBank, the nation's No. 3 bank and the largest banking company in Maryland, closed down 50 cents, at $49.25. Citicorp, the nation's biggest bank, closed up 12.5 cents, at $41.25 a share; Chase Manhattan stock closed up 25 cents, at $35.75 a share; and Chemical Banking Corp. shares closed off $1, at $40.50 a share.

Investors also tried to evaluate the effect of Monday's Los Angeles earthquake. Lloyd's of London, the British insurance group, said damage caused by the disaster is likely to total $7 billion.

"The earthquake will be a boon for banks and construction companies, but it means trouble for insurance and transportation companies," said Peter Cardillo, research director at Westfalia Investments Inc.

On Monday, the earthquake prompted investors to snap up shares of companies tied to homebuilding and heavy construction in California, traders said.

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