Stocks mixed, with Dow up 20 S&P 500 also gains, but Nasdaq droops along with tech issues

March 18, 1997|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks were mixed yesterday as investors flocked to shares of companies most likely to match earnings expectations, amid concern that interest rates are headed higher.

Gains in Bristol-Myers Squibb Co., Merck & Co. and other drug stocks offset declines in Philip Morris Cos. and computer-related shares.

"The companies that come through with earnings are going to come out OK," said Franklin Morton, head of equities at Ariel Capital Management, which oversees $1.5 billion. "Meeting expectations is far more important than whether interest rates go up or down a little bit."

The Dow Jones industrial average rose again yesterday, after having been down nearly 80 points during the session, then recovering in the final hour.

A computer-guided "buy" program added 71 points to the average in the final 20 minutes of trading, helping it close up 20.02 at 6,955.48.

The Standard & Poor's 500 index gained 2.54 to 795.71, led by drug shares. Makers of cholesterol-lowering drugs, including Bristol-Myers and Merck, gained after the American Heart Association said more heart patients should take the drugs.

Bristol-Myers rose 5.125 to 67.375 and Merck gained 2.75 to 91.125.

On the broad market, the Russell 2,000 index of small capitalization stocks lost 3.67 to 357.37; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq exchanges, dropped 4.26 to 7576.67; the American Stock Exchange composite index fell 4.23 to 596.24; and the S&P mid-cap index slid 1.77 to 262.50.

The yield on the benchmark 30-year Treasury bond rose 1 basis point to 6.95 percent.

Philip Morris fell $2.50 to $126.625 after the Supreme Court let stand a Florida law forbidding the cigarette maker from claiming that tobacco users bear personal responsibility for smoking-related illnesses.

Two of the four companies to join the Dow industrials yesterday gained. Hewlett-Packard Co. rose 25 cents to $55.625, and Wal-Mart Stores Inc. rose 12.5 cents to $28.875. Johnson & Johnson was unchanged at 57.875. Travelers Group Inc. slid $1.375 to $51.875, the third-biggest decline in the Dow industrials.

Overall, decliners outnumbered advancing stocks 2 to 1 on the New York Stock Exchange.

Investors said enthusiasm for stocks weakened after investor Warren Buffett said Saturday that the past two years' rally has made "virtually all stocks" too costly.

Shares of computer, semiconductor and software companies fell as investors abandoned the stocks after a two-month slide in which the Morgan Stanley high tech index has dropped 14 percent.

"Those stocks are inherently unstable," said Ron Muhlenkamp, chief investment officer at Muhlenkamp & Co., which manages $140 million.

"The fact that they're going down is a reason to sell them if you're a momentum player."

International Business Machines Corp. fell $4.125 to $139.50.

The Nasdaq composite index fell 13.54 to 1,279.43, led by Intel Corp., down $1.50 to $136.375; Cisco Systems Inc., down $1.4375 to $49.125; and Tellabs Inc., down $2.4375 to $35.6875.

Class A shares of Advanta tumbled $8.50 to $31.875. The lending company said it would report its first quarterly loss in nine years because of higher-than-expected defaults on credit card loans.

Advanta forecast a loss of 44 cents a share for the first quarter and cut its profit forecast for this year by 67 percent to $1.50 a share. Wall Street was expecting 1997 earnings of $4.49 a share, according to a survey by IBES International Inc.

Other credit card companies fell with Advanta. American Express Co. lost 75 cents to $63.75. Capital One Financial Corp. dropped $1.625 to $37.50; Money Store Inc. lost 75 cents to $25.375; and First USA Inc. retreated 62.5 cents to $49.25.

Pub Date: 3/18/97

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