Stocks rise with firms' end-of-year earnings Dow boosted 44.44 by corporate gains in slowing economy

January 17, 1996|By BLOOMBERG BUSINESS NEWS

NEW YORK -- U.S. stocks, led by Citicorp and Chase Manhattan Corp., rose yesterday as a slew of companies reported stellar fourth-quarter profits and bonds rallied.

Rising earnings for banks, telephone and semiconductor companies showed that corporate profits can shine even as the economy slows, investors said.

Companies that posted better-than-expected earnings yesterday included Ameritech Corp., Chemical Banking Corp., Honeywell Inc., Johnson Controls Inc., Travelers Group Inc., Banknorth Group Inc., Lam Research Corp. and Lattice Semiconductor Corp.

The Dow Jones industrial average seesawed throughout the day to end at 5,088.22, up 44.44, led by International Business Machines Corp., Procter & Gamble Co. and J. P. Morgan & Co.

IBM shares jumped $4.50, to $87.625, as analysts predicted the computer company would report earnings soared 63 percent last quarter on improved hardware sales, among other things.

Eastman Kodak Co. jumped $1.625, to $69.25, as analysts speculated the film and copier company might sell its unprofitable copier division for about $1 billion.

Boeing Co., meanwhile, dropped $1, to $76, after reports that it had broken off exploratory merger talks with McDonnell Douglas Corp. The companies declined to comment. McDonnell Douglas rose 12.5 cents, to $92.125.

The Standard & Poor's 500 index rose 8.62, to 608.44, and the Nasdaq composite index added 7.30 to reach 995.87.

About 1,432 stocks rose and 948 fell on the New York Stock Exchange, where 425 million shares changed hands, compared with 357.4 million daily average volume.

The Russell 2,000 index of small companies slid 0.38, to 301.75, its lowest level since Nov. 22; the American Stock Exchange market value index fell 0.79, to 531.91; and the Wilshire 5,000 Index jumped 56.37, to 5,925.79.

Citicorp kicked off the good news when it announced fourth-quarter profits that beat Wall Street's expectations. The company also said it would boost its dividend 50 percent and buy back $1.5 billion worth of stock. Its shares jumped $4.50, to $68.

Chase Manhattan and Chemical Banking -- engaged to merge before March -- also had good turnouts. Chemical Banking, up $3.875 at $60.875, said fourth-quarter earnings rose 48 percent on higher credit-card fees and a surge in securities trading revenue.

Chase Manhattan's stock gained $3.875, to $60.875, after it announced it earned $1.70 a share last quarter, beating analysts' estimate of $1.41.

Among other financial companies with better-than-expected profits, First Interstate Bancorp shares climbed $2, to $137.50, and Bank of New York Co. rose $1.875, to $47.

Even the Federal Home Loan Mortgage Corp., which posted earnings a cent shy of Wall Street's expectations, climbed 62.5 cents, to $78.875.

Phone shares got a lift after Ameritech reported earnings that beat estimates. Its shares surged $2.625, to $59.875.

Computer, software and semiconductor companies advanced as Lam Research and Lattice Semiconductor announced profits that surpassed analysts' estimates.

Sun Microsystems, though, posted fiscal second-quarter earnings after the market closed that beat Wall Street estimates. The computer networking and workstation company earned 65 cents a share, compared with 45 cents a year ago.

Microsoft Corp. and IBM, both of which are scheduled to report earnings this week, climbed amid optimism that robust demand for computers buoyed their profits last quarter.

Microsoft shares added $3.875, to $86.375, and IBM jumped $4.50, to $87.625.

Falling Treasury bond yields also helped boost stocks, signaling that bond investors expect interest rates to drop. Yields on benchmark 30-year Treasury bonds dropped to 6.06 percent from 6.15 percent Friday.

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