Dow recoups early loss, rising 7.95

March 07, 1995|By Bloomberg Business News

NEW YORK -- U.S. stocks closed little changed yesterday as Walt Disney Co., technology and oil issues rallied, offsetting a slump in bank and utility stocks caused by a falling dollar and higher Treasury bond yields.

Falling stocks swamped advancing issues by almost 14 to 8, on volume of 289.8 million shares. Even so, stocks managed to overcome record lows in the dollar, a half-point drop in Treasury bonds and continued poor economic news from Mexico.

"With all the things I perceive as negative out there, I can't believe this market," said David Butler, senior trader at Kemper Financial Services in Chicago. "If it holds up in these sorts of times, I'd hate to see what it's going to do when we get some good news."

After tumbling as much as 33.89 points, the Dow Jones industrial average rose 7.95, to 3,997.56, adding to Friday's 9.68-point gain. Disney, which surged $2.25, to a record high of $56, contributed 5.9 points to the advance.

Among broader market indexes, the Standard & Poor's 500-stock index fell as much as 3.9 before closing at 485.63, up 0.21.

Stocks also got a late boost from a round of computer-guided orders to buy stocks that began at about 3 p.m. EST and added 11 points to the Dow and 1.1 points to the S&P 500, according to Birinyi Associates Inc.

The Nasdaq composite index dropped 1.02, to 797.77, after initially falling as much as 7.09. Oracle Systems Corp., Amgen Inc., Novell Inc., Tele-Communications Inc. and Sonoco Products Co. all dropped. On Friday, the Nasdaq surged 5.11, to 798.79, leaving it 1.4 percent below its March 1994 record high of 803.93.

Part of the explanation for yesterday's rebound probably can be found in the large losses U.S. investors have suffered in Latin American and Asian markets in the past few months, said Thom Brown, managing director at $260-million Rutherford, Brown & Catherwood Inc. in Philadelphia.

"There are a lot of people deserting these foreign markets and putting their money back into this market, and when they do they're looking for anything that will grow its earnings and has reasonable quality," Mr. Brown said.

Disney, for instance, surged after the resort and entertainment company said it sold 20 million copies of its "The Lion King" videotape in the first week of its release, amassing estimated sales of $340 million.

Philip Morris, maker of Marlboro cigarettes, climbed $1.25, to $63.25. Merrill Lynch & Co. raised its long-term investment opinion on the parent of Kraft Foods and Miller beer to "buy" from "above average."

IBM has jumped $6.375, or 9 percent, since last Tuesday as investors regained confidence that it's finished its turnaround and that strong mainframe computer sales will continue to buoy profits.

Other technology stocks also rallied for a fifth day, partly in anticipation of management presentations at a Goldman, Sachs & Co. conference starting today. Last week, Texas Instruments Inc. predicted the worldwide market for computer chips will swell 21 percent, to $124 billion, this year. Also, reports surfaced of a severe shortage of computer memory chips needed for multimedia and interactive applications.

Oil stocks rallied after industry analyst Matthew Simmons, in Barron's magazine, highlighted the likelihood of dwindling supplies, rising demand and higher crude oil prices in coming years.

Stocks fell early in the day along with the dollar. The U.S. currency plunged to record lows against both the Japanese yen and the German mark during the day.

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