Stocks recover 32 points of the hit J. P. Morgan earnings ignite the rally

Nasdaq surges 20.89

January 12, 1996|By BLOOMBERG BUSINESS NEWS

NEW YORK -- U.S. stocks rebounded yesterday from two days of steep declines as investors rewarded J. P. Morgan & Co. and other companies posting better-than-expected earnings.

The Dow Jones industrial average climbed 32.16 to 5,065.10 after tumbling 165 points, or 3.17 percent, Tuesday and Wednesday. Financial-service, software, semiconductor, homebuilder and retail stocks were among those posting improved profits.

The Standard & Poor's 500 index advanced 4.21 to 602.69. Gains would have been greater had it not been for three series of computer-guided orders to sell stocks, according to Birinyi Associates.

Notching its biggest gain since Dec. 19, the Nasdaq composite index rallied 20.89 to 1,011.1, snapping three days of losses. The Russell 2,000 index of small-company shares climbed 2.81 to 305.72, ending a two-day slide, and the Wilshire 5,000 index rose 53.62 to 5,903.82.

The number of advancing stocks outpaced declining issues by 14 to 9 on the New York Stock Exchange. Volume slowed to 408.8 million shares, down from 496.84 million Wednesday.

Stocks also benefited from a halt to rising Treasury bond yields. Benchmark 30-year bond yields dipped to 6.15 percent from 6.19 percent Wednesday.

Financial-services companies got a lift from J. P. Morgan & Co.'s 89 percent growth in fourth-quarter net income, as profits from trading and investment banking surged. The nation's fifth-largest banking company said net income climbed to $366 million, or $1.80 a share, from $193 million, or 96 cents, a year ago, beating analysts' projections of $1.57.

J. P. Morgan, part of the Dow industrials, surged $1.875 to $76.375, single-handedly adding 6 points to the index.

Federal National Mortgage Association said quarterly earnings before a charge jumped to $2.31 a share, up from $2.02 last year and above forecasts of $2.28. Shares in the mortgage lender vaulted $3.375 to $122.375.

First Union Corp. gained 62.5 cents to $52.125 after the Charlotte, N.C.-based bank said earnings rose to $1.45 a share from $1.17 in the year-earlier period.

Of the 46 companies in the S&P 500 that have reported fourth-quarter earnings, 37 percent surpassed analysts' estimates and 39.1 percent fell below. At the same time last quarter, 45.5 percent of companies beat forecasts while 40.9 percent did not.

Computer-equipment companies surged after Xilinx and International Rectifier Corp. reported earnings that also exceeded expectations.

Xilinx, a maker of specialty semiconductors, had fiscal third-quarter net income of 41 cents a share, up from 21 cents in the year-ago period and 3 cents above estimates. The stock spurted $3.5625 to $31.8125.

International Rectifier jumped $3.625 to $23.875 after it said fiscal second-quarter earnings climbed to 30 cents a share from 18 cents, higher than forecasts of 27 cents.

Those reports helped drive up the Philadelphia semiconductor index by 8.18, or 4.6 percent, to 184.98. In the previous four days, the index had skidded 10.1 percent.

Semiconductor makers also rose after Atmel Corp., a specialty chip producer, and Novellus Systems Inc., a maker of chip-manufacturing equipment, authorized the repurchase of millions of shares. Atmel jumped $4.25 to $23.625, and Novellus rose $3.50 to $50.75.

Among retailers, Lands' End Inc. rose $1 to $13.875. The mail-order catalog company said earnings in the nine weeks ended Dec. 29 advanced to 75 cents from 69 cents in 1994.

Stock market gains were tempered by Apple Computer Inc.'s warning late Wednesday that it will lose about 55 cents a share in its fiscal first quarter and take a charge for layoffs. Apple rose 75 cents to $35 after slumping $1.875.

Wellman Inc. tumbled $3.125 to $20.125 after the maker of polyester fiber said it sees disappointing earnings ahead.

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