Stocks mixed amid rally in bonds Dow industrials up 3, ending 5 days of losses

Nasdaq falls 5 points

June 18, 1996|By BLOOMBERG BUSINESS NEWS

NEW YORK -- U.S. stocks were mixed yesterday as a rally in bonds failed to shake investors' concern that profits won't meet expectations later this year. Oil shares gained; semiconductors retreated.

The 30-stock Dow Jones industrial average rose 3.33 to 5,652.78, snapping five straight days of losses. Exxon Corp. and International Business Machines Corp. rose most.

The broader Standard & Poor's 500 index fell 0.68 to 665.17 and the Nasdaq composite index sank 5.55 to 1,207.64.

Expectations of slowing growth, coupled with optimism that the Federal Reserve won't raise interest rates next month to quell inflation pressures, helped drive the yield on the 30-year Treasury bond lower for a third day. The yield fell 2 basis points to 7.06 percent, down from 7.19 percent last Wednesday.

The prospect of lower rates and lower borrowing costs pushed the Dow industrials up more than 28 points late in the day, but concern about profits helped push stocks back down.

The Russell 2,000 index of smaller companies slid 1.15 to 353.93; the Wilshire 5,000 index dropped 12.53 to 6,616.42; the S&P midcap index declined .69 to 237.87; and the American stock exchange market value index lost 3.32 to 590.53.

Declining issues outnumbered advancing issues on the New York Stock Exchange, 1,207 to 1,086.

Philip Morris Cos. led decliners in the Dow industrials, falling $1 to $104.375, after the prosecuting attorney in a Mississippi anti-tobacco lawsuit said six new industry insiders have come forward to assist the state's case.

Semiconductors slid for a third day. Cyrix Corp. fell $2.0625 to $23.50 after an analyst at Southcoast Corp., who recently took over coverage of Cyrix, cut the former analyst's earnings estimate for the current quarter by more than half.

Cyrix rival Intel Corp. shed $1 to $72. International Rectifier Corp. slid $1.875 to $19.25 after Montgomery Securities cut its earnings estimate and rating for the chip maker.

Brooktrout Technology Inc. and Smith Micro Software Inc., two small computer software publishers, slid amid concern about the current quarter's earnings estimates, analysts said. Brooktrout fell $5.75 to $32.75, and Smith Micro retreated $1.875 to $11.50. IBM rose $1 to $102.625 after announcing that it will begin selling laser printers designed for computer networks, in competition with market leader Hewlett-Packard Co., which fell 25 cents to $99.

Oil shares gained, following crude prices higher. A standoff between United Nations inspectors and Iraq led to speculation that the recent "oil-for-aid" agreement might be delayed or shelved, tightening supplies.

Exxon rose $1 to $84.50; Texaco Inc. gained 62.5 cents to $84.125; and Chevron Corp. climbed 37.5 cents to $60.

First Union Corp. rose 50 cents to $60.50 after it said it would buy two smaller East Coast banks, Center Financial Corp. of Connecticut and Home Financial Corp. of America, based in Hollywood, Fla., for a total of about $715 million in stock.

Center Financial shares rose $1.25 to $24.125 on news of the $25.44-a-share buyout agreement. Home Financial fell 56.25 cents to $13.0625 on the $13.40-a-share offer from Charlotte, N.C.-based First Union.

Kansas City Power & Light rose $1.50 to $27.375 after Western Resources said it sweetened its bid for the utility to $31 a share from $28.

Frederick's of Hollywood Inc. shares gained after the lingerie retailer said it is considering options to enhance shareholder value, including selling the company. Frederick's Class A shares rose 87.5 cents to $5.

Saks Holdings Inc. climbed $1.625 to $34.625 after Goldman, Sachs & Co. initiated coverage with a "buy" and three other brokerages rated the posh department store chain "strong buy."

Pub Date: 6/18/96

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