Renewed confidence buoys market

March 17, 1994|By Bloomberg Business News

NEW YORK -- U.S. stocks rallied yesterday as investors became confident the Federal Reserve won't raise rates next week after a report showed inflation was under control.

The Labor Department report showed consumer prices rose in February by 0.3 percent, in line with economists' expectations.

"The [Consumer Price Index] is right where everyone thought it would be," said Alfred Goldman, director of technical research at A. G. Edwards & Sons in St. Louis. There is a growing recognition that "the Fed doesn't need to raise rates because the market already has."

The Federal Open Market Committee, the central bank's policy-making arm, is to meet Tuesday. On Feb. 4, the Fed raised the perceived target for the federal funds rate -- the rate banks charge each other for overnight loans -- to 3.25 percent from 3 percent, the first rise in five years.

The Dow Jones industrial average rebounded more than 25 points from session lows yesterday before computer-programmed sell orders kicked in at the close. The average finished 1.44 lower, at 3,848.15. Caterpillar Inc. and General Electric Co. led the decline.

The Standard & Poor's 500 Index rose 2.41, to 469.42, after declining 0.38, to 467.01, Tuesday. Integrated oil companies led the index higher as West Texas Intermediate Crude for April delivery rallied 23 cents, to $15.06.

Chevron rose $1.75, to $89.75; Exxon Corp. rose 12.5 cents, to $64.875; and Amerada Hess Corp. rose $1.875, to $48.25. Shares of Amoco Corp. surged $2.50, to $54.625, after they were raised to "accumulate" from "neutral" by analysts at Dean Witter Reynolds and Goldman, Sachs & Co.

The American Stock Exchange Market Value Index rose 1.69, to 469.82.

Meanwhile, the Nasdaq Combined Composite Index rose 5.47, to 798.99. The index was buoyed by shares of 3Com Corp., which rose $2.875, to $62.875, after reporting third-quarter earnings of 72 cents a share, excluding charges, up from 37 cents a year ago.

Shares of software makers rallied on Adobe Systems Inc. plans to acquire Aldus Corp., another software company, in a stock swap valued at about $525 million. Aldus shares rose $6, to $32.25; Electronic Arts Inc. rose $1.50, to $28.50; Adobe shares fell $3, to $29.50.

About 11 shares rose for every six that fell on the New York Stock Exchange. Trading was active, with 306.8 million shares trading hands on the Big Board, higher than the average 288 million traded daily over the past six months.

Centex Telemanagement Inc., Acclaim Entertainment Inc., Telefonos De Mexico SA ADRs, Aldus and Adobe were the most actively traded U.S. stocks.

Shares of Nike Inc., maker of sports shoes and apparel, rose $3, to $57.50, after reporting third-quarter net income of 85 cents a share, down from $1.16 a share in the year-ago period. The company said future orders, those placed six months ahead of time, rose for the first time in more than a year. The shares were upgraded to "outperform" from "neutral" at Smith Barney Shearson Inc.

Centex Telemanagement Inc. stock rose $5.625, to $10.50, after MFS Communications Co. offered to buy all of its outstanding stock for $9 a share in cash. MFS rose $4.375, to $35.125.

Newbridge Networks Corp. rose $2.50, to $62.50, after it said it will supply equipment to Swiss Telecom PTT for a pilot ATM switching network to send information, voice and video.

Skyline Corp. rose $1.375, to $21.875, after the maker of manufactured housing said third-quarter earnings increased to 22 cents a share from 13 cents in the prior year.

U.S. Surgical Corp. gained $2.25, to $18.375. The medical supplies company said it expects its first-quarter loss to be bigger than the fourth-quarter operating deficit. For the rest of the year, the company said it expects to record a profit.

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