Boeing takes off as stocks close mixed Jet maker gains on news of higher 737 production

retail shares decline

June 20, 1996|By BLOOMBERG BUSINESS NEWS

NEW YORK -- U.S. stocks were mixed yesterday as a drop in retail and credit card issues offset a gain in Boeing Co.'s stock, which came after the company announced plans to double production of its best-selling jet.

Boeing's announcement eased concern that companies' earnings in 1996 will fall short of last year's results, a conclusion some investors reached after semiconductor companies yesterday warned that sales were slowing. It also showed that the dollar's rise this year hasn't hurt U.S. exports so far.

The Dow Jones industrial average rose 20.32 to 5,648.35 after climbing 46.54 points earlier. The 30-stock average fell in six of the previous seven trading sessions. Advancing with Boeing were Procter & Gamble Co., Goodyear Tire & Rubber Co. and Minnesota Mining & Manufacturing Co.

Retail shares fell back a day after the Bank of Tokyo-Mitsubishi/Schroder Wertheim weekly same-store sales report found sales little changed in the second week of June. Retailers' decline led the Standard & Poor's 500 index down 0.10 to 661.96, after it rose 3.56 points earlier.

Among retailers, Wal-Mart Stores slid 62.5 cents to $24.625; Sears, Roebuck & Co. fell 25 cents to $49.875; and J.C. Penney Co. dropped 87.5 cents to $51.875.

The Nasdaq composite index fell 3.81 to 1,179.27, a day after tumbling 24.58 points, or 2.03 percent -- its biggest decline since March 8. Computer stocks were still able to advance, and the Morgan Stanley High Tech Index rose 1.95 to 320.67.

Yesterday's most active stocks in U.S. composite trading were Iomega Corp., ValuJet Inc., Wheelabrator Technologies Inc., Intel Corp. and Cisco Systems Inc.

Among broad market indexes, the Russell 2,000 index of small capitalization stocks fell 1.85 to 347.2; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq stock exchanges, dropped 13.23 to 6,555.62; the American Stock Exchange market value index fell 0.06 to 588.93; and the S&P 400 midcap index slid 0.13 to 236.56.

Boeing's stock jumped $1.625 to $84.75 after it said it will build more 737 jets during the next two years than previously planned. The rev-up in manufacturing marks the third time since December that the world's leading maker of passenger airplanes announced a production increase.

Byron Callan, an analyst at Merrill Lynch & Co., raised his estimate for Boeing's 1997 earnings to $5.20 a share from $4.85.

Investors continued to punish companies that reported disappointing profits or made a more sober projection. On Tuesday, shares of Lattice Semiconductor Corp. and ADFlex Solutions Inc. tumbled when they warned that semiconductor sales are below expectations this quarter.

Minntech Corp.'s stock dropped $2.25 to $12.75. After the close of trading Tuesday, the medical supplies company said earnings in the fourth quarter ended May 31 fell to $502,000, or 7 cents a share, from $1.45 million, or 22 cents. Analysts expected the company to earn 24 cents a share.

Philip Morris stock fell 12.5 cents to $102.375 after jumping to $103.75 earlier. The shares have lost $3 in three days amid concern that the largest class-action suit by smokers against the tobacco industry would be appealed to the U.S. Supreme Court.

The stock pulled back even after Gary Black, an analyst at Sanford C. Bernstein & Co., told clients that chances are "almost nil" that the highest U.S. court would hear the appeal of the so-called Castano case. RJR Nabisco Holdings Corp. slid 25 cents to $33.

Shares of credit card companies dropped, leading financial issues lower. After the close of trading, Bank of New York Corp. said it would set aside $350 million to cover losses from bad credit card accounts. Analysts said Bank of New York's problems may be the tip of the iceberg.

Intel rose $1 to $71.375. Insiders at the computer chip maker aren't selling their shares, giving a strong signal to buy the stock, CDA/Investment President Bob Gabele said in the Wall Street Journal.

Pub Date: 6/20/96

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