Dow gains 14, to record high broader market mixed

January 20, 1994|By Bloomberg Business News

NEW YORK -- The Dow Jones industrial average set a record high yesterday, while broader market indexes were mixed amid concern about the strength of corporate profits.

The Dow gained 14.08 points, to 3,884.37, exceeding the record set Tuesday. The gain was buoyed by a burst of computer-driven buy orders triggered in the final 30 minutes of trading.

The Standard & Poor's 500 Index climbed 0.05, to 474.3. The Nasdaq Combined Composite Index fell 3.74, to 789.28.

Shares of drug, semiconductor and computer-related companies slumped after Pfizer Inc., Intel Corp., Digital Equipment Corp. and Sun Microsystems Inc. reported financial results for the latest quarter that were well below expectations.

"Those stocks were hammered, and the effects were felt by the entire stock market," said Marshall Front, president of Stein Roe & Farnham Inc. in Chicago.

The S&P index of drug stocks slumped 37.05, or 3 percent, to 1,193.26. A drop in shares of Pfizer accounted for much of the decline after the company reported that its earnings rose to 90 cents a share in the fourth quarter, from 83 cents in the prior year. Analysts had estimated that the results would be closer to $1 a share. The stock closed down $4.875, to $63.

Meantime, the Standard & Poor's Semiconductor Index fell 5.7, or 2.9 percent, to 190.27. Shares of Intel, the largest independent computer-chip maker, plunged $4.75, to $62.50.

Intel said its fourth-quarter net income increased to $1.35 a share, from 99 cents the year before. Analysts had forecast that the company would earn $1.39, according to Institutional Brokers Estimate System Inc.

The decline in Intel's stock spilled into shares of other chip makers. Texas Instruments Inc. declined $1.50, to $69.375, and Advanced Micro Devices Inc. slid 37.5 cents, to $19.125.

"Wall Street is unforgiving," Mr. Front said. "Not only does the company that reported the bad news get hurt, but so does the whole group."

Among other technology companies, Digital Equipment said that its loss for the fiscal second-quarter narrowed to 53 cents a share, from 57 cents, while revenue fell 12 percent.

Digital's loss "is huge," said David Wu, an analyst at S.G. Warburg & Co. "It doesn't take a genius to figure out that this isn't good news."

Digital's shares plunged $3.75, to $32.75.

Sun Microsystems fell 75 cents, to $27.25. The maker of computer workstations said its fiscal second-quarter earnings doubled, to 46 cents. The results were below estimates of 48 cents.

"These companies reported very bad results, and that cast a pall over the entire market," said Jon Groveman, president of Ladenburg, Thalmann & Co.

The decline in U.S. stocks was limited somewhat by a rally in Europe's stock markets. "If it weren't for the rally overseas, our stock market would be in much worse shape than it was," said John Brooks, director of sales and marketing at Notley Group in Atlanta.

The U.K.'s FT-SE 100 index rallied 1.1 percent, to a record 2,475.1, amid revived hopes for lower interest rates. France's CAC 40 Index soared 1.2 percent, to 2,274.67, on signs that the French economy is strengthening.

Stronger European economies may mean higher exports for U.S. companies like Caterpillar Inc., Minnesota Mining & Manufacturing Co. and Aluminum Co. of America. Those stocks were higher, with Caterpillar rising 87.5 cents, to $93.625, Minnesota Mining gaining $2, to $111.375, and Alcoa advancing $1, to $74.875.

Trading was active, with about 311 million shares changing hands on the NYSE. Intel, SynOptics Communications Inc., M. H. Meyerson & Co., Pfizer and RJR Nabisco Holdings Corp. were the five most actively traded issues.

SynOptics slumped $3.50, to $27.75.

The computer-networking company said its fourth-quarter net income rose to 34 cents a share, from 25 cents. Analysts had forecast a figure of about 36 cents.

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