Earnings news lifts Dow 13.46 points

October 18, 1994|By Bloomberg Business News

NEW YORK -- U.S. stocks closed mixed yesterday as strong third-quarter earnings and rallies in International Paper Co. and Bethlehem Steel Corp. offset declines in the dollar.

The Dow Jones industrial average gained for the third straight day, rising 13.46, to 3,923.93. International Paper, Bethlehem Steel Corp. and Philip Morris Cos. led the rise, outweighing losses in Eastman Kodak Co. and General Motors Corp.

"The earnings are coming in with enough momentum that they could propel us to new ground," said Ronald Doran, head of institutional equities trading at C. L. King & Associates Inc. "I think we have a shot at getting to 4,000" on the Dow industrials.

The Standard & Poor's 500 index dipped 0.14, to 468.96, and the Nasdaq combined composite index dropped 1.30, to 765.78, amid a plunge in drug company Gensia Inc.

Eleven stocks fell for every 10 that rose on the New York Stock Exchange. Trading was moderate, with about 238 million shares changing hands on the Big Board.

The Russell 2000 index rose 0.10, to 254.97; the Wilshire 5000 index eased 1.05, to 4,643.68, and the American Stock Exchange market value index advanced 0.26, to 458.76.

International Paper climbed $1.375, to $79.625, after Scott Paper Co. became the latest paper producer to post better-than-expected profits. Last week, International Paper reported a 42.6 percent increase in third-quarter earnings per share, and Georgia-Pacific Corp.'s earnings per share soared 791 percent.

Scott Paper went up $1, to $63.625, and Georgia-Pacific gained $1.50, to $78.50.

"Most of these paper companies are reporting the best quarterly numbers since 1990 or early 1991," said Matthew Berler, a paper analyst at Morgan Stanley & Co. "They are coming out of a three- four-year dip in earnings," thanks to a surge in pulp and paper prices.

Paper companies are just part of the picture. Of the 110 companies in the S&P 500 that have reported third-quarter earnings, 50.9 percent have surpassed analysts' expectations, compared with 30.9 percent that lagged and 18.2 percent that matched Wall Street estimates.

Paper and steel stocks also were lifted by positive comments by analysts on the television program "Wall Street Week with Louis Rukeyser," traders said. Bethlehem Steel Corp., one of the stocks mentioned, rose $1.125, to $19.75.

Tobacco and international oil stocks were among the biggest gainers in the S&P 500. Philip Morris Cos. gained $1.375, to $61.875, amid anticipation of the tobacco and food maker's third-quarter earnings today, traders said.

Oil stocks climbed on positive comments from John Neff, manager of the $11.6 billion Windsor Fund, and Bear Stearns analyst Fred Leuffer, in Barron's magazine. Mr. Leuffer said oil companies that pay high dividends, such as Royal Dutch Petroleum Co. and Atlantic Richfield Co., may be among the prime beneficiaries of rising prices for crude oil and natural gas.

Royal Dutch added $1.625, to $114.875, and Arco rose $1.50, to $102.125.

Strong third-quarter earnings offset a slide in the dollar, traders said.

The dollar tumbled to a two-year low of 1.4940 German marks in New York trading after Germany's coalition government retained power in Sunday's elections, bolstering demand for mark-denominated assets. A falling dollar makes U.S. assets such as bonds less attractive.

U.S. Treasury bonds were little changed as the weak dollar offset optimism that the Federal Reserve won't raise overnight bank loan rates this month to subdue inflation. The benchmark 30-year Treasury bond was unchanged, with a yield of 7.82 percent, down from 7.83 percent Friday.

"When you've had a week like last week," when the Dow gained 113.04 points, "you're probably going to see very little this week," said Don Hays, director of investment strategy at Wheat First Securities Inc.

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