Stocks show wild swings Shares recover after declines earlier in day

July 11, 1996|By BLOOMBERG BUSINESS NEWS

NEW YORK -- U.S. stocks recovered from a steep decline yesterday as a drop in bond yields offset disappointment about corporate profits triggered by unexpectedly weak earnings from Motorola Inc.

The Dow Jones industrial average rose 21.79 to 5,603.65, after falling 48.02 points with just over an hour of trading left. The 30-stock average has climbed 52.82 points in two sessions, regaining almost half of Friday's 114-point plunge. Eastman Kodak Co. and Aluminum Co. of America rose the most.

Among broad market indexes, the Standard & Poor's 500 index rose 1.31 to 656.06 after falling 6.36 points earlier. The Nasdaq composite index, filled with computer and semiconductor issues, wasn't as fortunate; it fell 12.40 to 1,141.19.

Some 1,386 stocks fell and 1,004 rose on the New York Stock Exchange, where about 421 million shares changed hands -- the most since June 28. The three-month daily average is 399 million shares.

Broad market indexes were mixed. The Russell 2,000 index of small capitalization stocks fell 3.73 to 332.71; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq stock exchanges, dropped 11.66 to 6,448.77; the American Stock Exchange market value index fell 4.86 to 561.81; and the S&P 400 midcap index slid 2.07 to 228.98.

Yesterday's most active stocks in U.S. composite trading were Motorola, Intel, Cisco Systems Inc., Ascend Communications and Sun Microsystems Inc.

The wild swing of the stock market could be seen in the shares of Procter & Gamble Co., which rose $1.50 and $1.125 before closing up 25 cents at $88.50. The consumer products company told analysts that per-share earnings will rise at a lower pace in the current quarter than a year ago.

Earlier, P&G said it would boost its quarterly dividend 12.5 percent and buy back up to $1 billion of stock.

The yield on the benchmark 30-year Treasury bond, which moves in the opposite direction of its price, fell to 7.08 percent from 7.13 percent Tuesday.

Cellular phone makers dropped, with Nokia AB's American depositary receipts falling $1.625 to $36.625 and Ericsson AB's receipts dropping $1.296875 to $20.45.3125.

A report yesterday from the Semiconductor Industry Association chip demand also stifled interest in shares of semiconductor, software and computer manufacturers. It said the computer chip industry's book-to-bill ratio rose to 0.91 in June from a revised 0.83 in May. That means for every $100 worth of chips sold by chip makers in the U.S., they took in $91 worth of orders. It shows demand is weak.

"There is a slowdown going on in the telecom area, in equipment demand, and it drives additional concerns about the strength of capital spending going forward," said James Solloway, director hTC of research at Argus Research Corp.

The Morgan Stanley high technology index fell 0.67 to 313.18. America Online Inc. slipped 50 cents to $39.50; Texas Instruments Inc. dropped 75 cents to $48.50; Intel Corp. dropped 50 cents to $72.875; and Broderbund Software Inc. slumped $1 to $31.75.

Pub Date: 7/11/96

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