Dow ends week down by almost 20 points DSC Communications sparks late slide in technology stocks

October 07, 1995|By BLOOMBERG BUSINESS NEWS

NEW YORK -- U.S. stocks were mixed across a range of industries yesterday, as technology issues were pulled down by a plunge in DSC Communications Corp.

Major market indexes were little changed amid gains by a handful of companies, such as Aluminum Co. of America, with sales closely tied to the economy and consumer stocks such as Procter & Gamble Co.

DSC, a maker of telephone and cable television equipment, touched off a late slide in technology stocks by announcing that third-quarter sales and earnings will fall short of expectations.

DSC shares slid $8, to $44.375, in trading of 16.6 million shares.

DSC's problems spilled over to rivals Tellabs Inc., down $3.25, at 37.25; and ADC Telecommunications Inc., which closed $2.9375 lower, at $37.

The Dow Jones industrial average rose 6.50, to 4,769.21, buoyed by gains in Alcoa and P&G. For the week, the Dow fell 19.87 points.

In the broader market, the Standard & Poor's 500 index dipped 0.14, to 582.49. Falling communication equipment, retail and computer stocks largely balanced gains in auto, regional bank and drug issues.

The Russell 2000 index of small-company shares added 0.61, to 301.82, and the Wilshire 5000 index rose 3.65, to 5,757.26.

Trading slowed to 316.1 million shares on the New York Stock Exchange, less than this year's average of 337.7 million shares. Advancing stocks outpaced declining issues by fewer than 11 to nine.

After the market closed, two other leading technology companies said earnings would not reach forecasts.

Novell Inc., the second-largest software company after Microsoft Corp., said it expects fiscal fourth-quarter earnings to fall as much as 46 percent below estimates because it lacks applications software for the hot-selling Windows 95 system.

BMC Software Inc. said it expects fiscal second-quarter net income to fall 12 percent shy of analysts' projections.

Before the announcements, BMC fell $1, to $43.25, and Novell dropped 735 cents, to $17.375.

Technology stocks had posted modest gains through most of the day, fueled by Intel Corp., up $1.125, at $62. Merrill Lynch & Co. raised its investment opinion to "buy" from "above average," increased its earnings estimates and said the stock should rise to $90.

The Nasdaq composite index eased 2.16, to 1,012.04 after briefly rising to 1,022.81.

Earlier, evidence of a resurgence in technology shares came from ESS Technology Inc., a Fremont, California-based semiconductor maker whose initial public offering of 7 million shares saw its stock rise $1, to $16, after gaining as much as $3.75.

Cyrix Corp. shares jumped $2.75, to $42.50. The company introduced its next-generation microprocessor, to compete with Intel's Pentium processor.

Stocks of companies whose fortunes rise and fall along with the broad economy, such as auto, aluminum and chemical makers, were mostly higher.

Alcoa set the stage for the rally. The aluminum products maker, up $1.50, to $53.125, said third-quarter earnings more than tripled from a year ago, propelled by higher prices for soft drink cans and other products.

The Morgan Stanley index of 30 cyclical stocks rose 0.30, to 337.38, while its index of 30 consumer companies rose 0.45, to 267.07.

Procter & Gamble rose $1.125, to 80.125, an all-time high.

Optimism that interest rates will continue to decline and more mergers and acquisitions may be in store boosted regional bank, money-center bank and brokerage stocks.

Mellon Bank Corp. jumped $1, to $47.625; Chase Manhattan Corp. surged $1.125, to $63.625; and Travelers Group Inc. added $1.375, to $52.875.

September's employment report -- weak enough to bolster prospects the Federal Reserve might cut interest rates this year, without being so feeble as to convince investors the economy is grinding to a halt -- helped steady the stock market, traders said.

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