Blue chips rise, but Nasdaq falters Big board volume swells to 469 million, seventh highest ever

January 04, 1996|By BLOOMBERG BUSINESS NEWS

NEW YORK -- U.S. stocks were mixed yesterday, surrendering early gains, amid waning optimism that a budget agreement will be reached soon in Washington.

Lower prices for computer chip, semiconductor equipment, computer and software shares added to the market's woes.

Prices dropped late in the day in reaction to remarks by President Clinton that implied that there's no end in sight to the 19-day-old partial government shutdown.

Led by Procter & Gamble Co., Westinghouse Electric Corp. and AT&T Corp., the Dow Jones industrial average rose 16.62 to 5,194.07, its third straight advance. Before the onset of a series of computer-guided orders to sell shares in the final hour of trading, the 30-stock average had risen 29.63. Until then, stocks climbed as Johnson & Johnson and Ford Motor Co. fed expectations that corporate profits will keep growing this year.

Even as share prices fell, almost 15 stocks rose in price for every nine that fell on the New York Stock Exchange. Volume soared to 469 million shares from yesterday's 364.2 million shares, the seventh most active day on record.

In the broad market, the Standard & Poor's 500 index rose 0.59 to 621.32, fractionally below a record 621.69 set Dec. 13. The Wilshire 5,000 index eased 0.22 to 6,095.89; and the AMEX market value index rose 1.20 to 552.17.

Hurt by a slump in semiconductor and semiconductor-equipment companies, the Nasdaq composite index fell 12.39 to 1,046.26. The Russell 2000 index, a gauge of small-company stocks that reached a record 316.81 Tuesday, fell 1.6 to 315.21.

Sun Microsystems Inc. slid $3.50 to $41.25 as volume reached 8.5 million shares. The computer and software maker was downgraded to "neutral" from "attractive" at Bear Stearns Cos.

Applied Materials Inc., down $3.875 to an eight-month low of $37.50, was cut to "neutral" from "buy" by analysts at both Alex. Brown & Sons and Paine Webber Group Inc.

Those downgrades triggered a slump in stocks of computer chip makers, as investors became concerned that falling prices and increasing supply might eat into profits in 1996. The Philadelphia semiconductor index, which consists of stocks of both chip makers and equipment suppliers, fell 8.06 to 193.82, its lowest since Dec. 18.

JTC Intel Corp. dropped 87.5 cents to $57.75; Micron Technology Inc. slid $2.125 to $39.375; and LSI Logic Corp. dropped $2.50 to $31.125.

Johnson & Johnson, up $3.375 to $87.625, touched off higher prices for a handful of health-care stocks after the Food and Drug Administration approved the sale of its Renova ointment, a prescription skin cream used to reduce facial wrinkles and treat chronic sun exposure.

Mallinckrodt Group Inc. rose 25 cents, to $36.75, and Abbott Laboratories added 12.5 cents, to $41.875.

In another boost for health stocks, Merrill Lynch told clients yesterday that J&J's planned purchase of Cordis Corp. is likely to go ahead. Cordis rose 56.25 cents, to $98.0625.

Automakers gained after Ford said a global reorganization designed to save billions of dollars in vehicle development costs is running six to 12 months ahead of schedule. Ford rose 50 cents, to $29.875, after rising as much as $1.25, and Chrysler Corp. rose 37.5 cents, to $55.75, after earlier gaining $1.25.

Westinghouse surged $1.25 to $18.375 after agreeing to sell its defense electronics business to Northrop Grumman Corp. for $3 billion in cash, a major step to pare debt incurred in its purchase of CBS Inc.

A 0.84-point gain in the Dow Jones utilities average to 228.27, its highest level in two years, added to investors' optimism that interest rates won't rise in the next few months.

Large gains in overseas equity markets helped push up U.S. shares early in the day, analysts said.

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