Housing, earnings spur record Dow

January 21, 1994|By Bloomberg Business News

NEW YORK -- U.S. stocks closed higher yesterday as late rallies in Procter & Gamble and AlliedSignal drove the Dow Jones industrial average to a record.

Rebounds in computer stocks, meantime, helped the Nasdaq Combined Composite Index match its record close, set Tuesday.

Stocks were buoyed by better-than-expected earnings from leading consumer products companies such as Kimberly-Clark and high technology bellwethers such as Microsoft, Tandem Computer, AST Research and Conner Peripherals, traders said.

"Some of the technology stocks are bouncing back," said John )) Blair, head of equity trading at NatWest Securities Inc.

The Dow Jones industrials rose 7.59, to a record 3,891.96, surpassing yesterday's 3,884.37.

Procter & Gamble gained $1, to $59.25, after another diaper maker, Kimberly-Clark, said fourth-quarter earnings rose to 88 cents a share from 35 cents a year ago, surpassing the consensus analyst estimate of 78 cents in Zacks Investment Research.

4 Kimberly-Clark closed $3.625 higher, at $56.125.

The stock market also was bolstered by a Commerce Department report that showed U.S. housing starts rose 6.2 percent in December, to the highest level in almost four years. Economists surveyed by Bloomberg Business News had expected a decline of 0.7 percent.

"Housing starts came through substantially higher than the consensus estimate, and the reason is mortgage rates remain low and consumer confidence keeps expanding," said Robert Stovall, president of Stovall/Twenty-Advisers, which oversees more than $1 billion in assets. As a result, "money keeps flowing into equities."

Among broader market indexes, Standard & Poor's 500 Index rose 0.68, to 474.98, approaching its record close of 475.27, set Jan. 10. The American Stock Exchange Market Value Index rose 1.53, to a record 484.81, breaking the old high of 484.28, set Nov. 2.

The Nasdaq Combined Composite Index leapt 3.74, to 793.02, matching Tuesday's record. Rallies in Intel, Microsoft, and AST Research bolstered the Nasdaq index. Intel closed up $1.25, at $63.75, recouping part of yesterday's 5-point plunge. Microsoft rose $3, to $86.25, after the software maker's second-quarter earnings beat expectations.

AST Research surged $4.375, to $29.125. The maker of IBM-compatible personal computers was raised to a "buy" investment rating from "neutral" at Alex. Brown & Sons Inc.

Nine stocks advanced for every eight that fell on the New York StockExchange. Trading was active, with about 310 million shares changing hands on the Big Board.

"It's just a few big issues" lifting the industrial average and the Nasdaq index, said Edward Laux, head trader at Kidder, Peabody & Co.

Several drug stocks fell for a second straight day after Pfizer's lower-than-expected fourth-quarter earnings released Wednesday sparked concern about pharmaceutical industry earnings. Merck fell 12.5 cents, to $35.75, and Johnson & Johnson dropped $1.25, to $41.625. J&J was lowered to an "underperform" investment rating from "neutral" at Smith Barney Shearson Inc.

Altera was the most actively traded U.S. stock, followed by Intel, RJR Nabisco Holdings, and AST Re search.

Altera plunged $5.625, to $30. The specialty semiconductor maker, whose fourth-quarter earnings were in line with or better than analysts' estimates, said first-quarter sales growth is expected to be "much more modest" than the recent pace. Kidder, Peabody & Co. cut its investment rating on stock to "neutral" from "strong buy."

Pennzoil Corp. shed $1.625, to $53.875. The Internal Revenue Service told the oil company it may owe as much as $956.5 million in back taxes and interest associated with a $3 billion settlement received from Texaco Inc. in 1988. Bear, Stearns & Co. cut its investment rating to "avoid" from "hold."

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