Rally covers banking fears

IBM, 3M, GM

March 10, 1995|By Bloomberg Business News

NEW YORK -- U.S. stocks were little changed yesterday as a rally in International Business Machines Corp. and Minnesota Mining and Manufacturing Co. eclipsed speculation that some banks may have sustained losses in Latin America.

The Dow Jones industrial average gained 4.16, to 3,983.39, adding to Wednesday's 16.6-point advance, as IBM Corp. climbed to a 2 1/2 -year high and 3M and General Motors Corp. both moved up.

For the second day in a row, some investors said the market's apparent resilience masked weakness beneath the surface, and they expected share prices to retreat soon.

"I'm surprised at this point the market is holding up as it is, given the consensus view that the economy is slowing," said John Kim, chief investment officer at $19 billion Aetna Life Insurance and Annuity Co. in Hartford, Conn.

Many investors apparently held off making big bets on stocks until after the Labor Department releases February's employment report today.

The Standard & Poor's 500 index inched up 0.02, to 483.16, extending a 1.02-point gain Wednesday. Higher prices for telephone, automobiles, computer and household product stocks largely outweighed weaker drug, oil, utility and retail issues.

Four stocks fell for every three that rose on the New York Stock Exchange, where volume totaled 320.1 million from this year's average 330.8 million.

Hurt by technology companies such as Microsoft Corp., Cisco Systems Inc., Bay Networks Inc., DSC Communications Corp. and Parametric Technology Corp., the Nasdaq composite index grew 0.43, to 796.24, after rising 4.48 Wednesday.

The Russell 2,000 index of small stocks slipped 0.8, to 254.79, and the Wilshire 5,000 index rose 2.11, to 4,760.53.

Gains in 3M, GM and IBM probably reflected some investors' decision to abandon stock markets in parts of Latin America and Asia in favor of American multinational corporations, traders said.

"You've seen some repatriation of money from Latin America and other areas of the world, and I think it's going into blue chip stocks," said Paul Hennessey, head of equities trading at Boston Co.

3M climbed $1.625, to $55.375, its highest since late September, amid expectations the recent slump in the dollar will boost the company's first-quarter overseas earnings. 3M gets 50 percent of sales outside the United States, with 25 percent in Europe alone.

GM and other auto stocks advanced after S. G. Warburg & Co. analyst David Healy made positive remarks on CNBC. Mr. Healy said GM will rise to $45 a share within 12 months. GM rose $1, to $41.25. Ford Motor Co. rose 37.5 cents, to $25.375.

International Business Machines Corp. surged as much as $1.625, to $81.375, the highest since September 1992, before closing up 87.5 cents. The stock rose after Vobis Microcomputer AG, Germany's bigger personal computer maker, announced it will switch to an IBM operating system for its equipment,

abandoning Microsoft Corp.'s MS-DOS system. Also, on Wednesday, IBM won an important product liability suit in Minnesota.

Concern about the possibility of large losses on loans made in Latin America hurt some bank shares, at one point pulling J. P. Morgan & Co. stock down $2.375, or almost 4 percent. The bank closed $1.125 lower, at $62.75. The Mexican peso fell again, amid concern wage and price controls might unravel.

Morgan is perceived to "have big exposure in Latin America," and investors are apparently concerned "they're going to have bad debts on their loans," said Anthony Conroy, director of equity trading at BT Global Asset Management, a division Bankers Trust New York Corp.

Money-center and regional banks were among the two worst performing groups in the Standard & Poor's 500 Index, even as yields on benchmark 30-year Treasury bonds dropped to 7.51 percent from 7.54 percent Wednesday. Lower rates typically boost bank stocks because investors perceive less of a threat to profit margins.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.