Dow gains 5.78 points, closes at 4,769.93 Drug shares gain, but high-technology companies slip

September 26, 1995|By BLOOMBERG BUSINESS NEWS

NEW YORK -- U.S. stocks were mixed yesterday as a profit warning by Advanced Micro Devices Inc. weighed on semiconductor shares. Gains in pharmaceutical shares tempered the decline.

AMD's profit warning, which came in the wake of similar caveats from Caterpillar Inc. and Minnesota Mining & Manufacturing Co. last week, fueled concern that earnings overall will fall below expectations.

The Dow Jones industrial average closed up 5.78 points, at 4,769.93, after dropping 19.15 earlier in the day. General Electric Co. and Walt Disney Co. shares rose, while Aluminum Co. of America, International Business Machine Corp. and Boeing Co fell. A round of computer-guided buying at 2:50 p.m. added 5 points to the average, according to Birinyi Associates Inc.

The broader Standard & Poor's 500 index rose 0.8, to 581.81, after slipping 2.07, to 579.66. Health-care, electrical equipment and insurance issues gained, countering losses in semiconductor, communication equipment and telephone shares.

The technology-laden Nasdaq composite index dropped for a third day, slipping 7.23, to 1,046.16. The index has slipped 2 percent over the last three trading sessions. Declines in shares of Intel Corp., Cisco Systems Corp. and DSC Communications Corp. weighed on the index yesterday.

The Russell 2000 index of small companies fell 1.89, to 310.16.

Some 1,325 shares fell and 875 shares rose on the New York Stock Exchange. The American Stocks Exchange market value index fell 3.52, to 544.38, and the Wilshire 5000 were down 9.73, to 5,783.31.

Trading was light because of Rosh Hoshanah. About 273 million shares changed hands, compared with 370 million on Friday.

Concern that a slowing economy will dampen earnings growth prompted investors to buy shares of pharmaceutical companies, whose earnings do well even when economic growth eases.

Senate Republicans presented a Medicare plan yesterday that will seek deeper initial cuts than the House Republican plan in payments to health providers and a bigger boost in out-of-pocket costs to the elderly.

That could mean people will spend more on less-expensive, non-prescriptive drugs from Johnson & Johnson, Bristol-Myers Squibb Co. and American Home Products Corp.

Johnson and Johnson's shares led the advance, climbing $1.125, to $73.875. Bristol-Myers rose $1.25, to $72.875, and shares of American Home Products gained 87.5 cents, to reach $85.25.

The prospect of slowed earnings growth hurt shares of companies whose profits are tied to trends in the economy. Alcoa's stock, for instance, was down $1.25, to $51.875.

In merger activity, Republic New York Corp. agreed to buy Brooklyn Bancorp Inc. and its CrossLand Federal Savings Bank unit for $529.6 million in cash. The acquisition is the latest in a record wave of U.S. banking mergers that has already topped $40 billion in 1995. Brooklyn Bancorp shares jumped $2, to $38.875, and Republic New York shares rose 12.5 cents, to $57.625.

Advanced Micro Devices Inc.'s shares slipped $2, to $31.125, dragging down shares of other semiconductor makers. The Sunnyvale, Calif.-based company said yesterday that it shipped the same number of its AM486 microprocessors as the previous quarter and at "sharply lower prices." It expects sales and earnings to fall below last quarter's 86-cents-a-share result, which also was below analysts' estimates.

Among other computer chip stocks that lost, Intel, the most actively traded share on U.S. exchanges yesterday, weakened 50 cents, to $60; Texas Instrument Inc.'s shares lost $1.125, to $78.625; and Micron Technology Inc.'s shares slid to their lowest level in almost three weeks, plunging $3.75, to $82. Gains in Apple Computer Inc. shares were a bright spot among the tech group. The company said it resumed shipping PowerBook portable computers. Apple shares rose 45.31 cents, to $37.5156.

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