Market rebounds from early tailspin Bargain-hunters step in after plunge triggered by Asian slide

Dow gains 66

January 13, 1998|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks rose yesterday for the first time in five days as investors snapped up beaten-down computer shares and Wall Street strategists suggested that equities already reflect most of the bad news from Asia.

Intel Corp. and Microsoft Corp. led the market's rebound from early losses triggered by tumbling markets from Hong Kong to Stockholm, Sweden.

"Prices got low enough that investors said to themselves, 'Let's step in and pick up some bargains,' " said Joe Stocke, a money manager at CoreStates/Meridian Investment Co., which oversees $2.5 billion in stocks. He said yesterday's rebound was a healthy sign for the market, because "investors didn't panic and showed they will stick with their long-term investment goals."

The Dow Jones industrial average rose 66.76 to 7,647.18, recovering from a 137-point slide. The 30-stock average had fallen about 400 points -- about 5 percent -- in the previous four sessions. The Standard & Poor's 500 index rose 11.52 to 939.21, and the Nasdaq composite index rose 4.36 to 1,507.58.

Among other broad market indexes, the Russell 2,000 index of small capitalization stocks slid 2.07 to 410.88; the Wilshire 5,000 index of stocks on the New York, American and Nasdaq stock exchanges climbed 63.10 to 8,938.57; the American Stock Exchange composite index lost 3.83 to 646.41; and the S&P 400 midcap index slipped 1.23 to 311.57.

Procter & Gamble Co. led a late-day surge, rising $3.4375 to $82.3125 after saying it will raise the prices of its Charmin, Bounty and Puffs paper products 4 percent to 7 percent.

Gains were concentrated among the largest stocks.

Seventeen stocks fell for every 13 that rose on the New York Stock Exchange, where about 692 million shares changed hands. It was the fifth-busiest day in exchange history; Friday was the fourth-busiest day ever.

Stocks were helped by positive comments from Abby Joseph Cohen, co-chair of Goldman, Sachs & Co.'s investment policy committee, who has been correctly bullish through the past three years' rally in stocks. She reiterated her view that Asia's slumping economies and currencies will have a muted impact on U.S. corporate profits.

Barton Biggs, chief global strategist at Morgan Stanley & Co., said the bear market in Asia may be in its final stages. And Byron Wien, Morgan's U.S. strategist, urged investors to buy U.S. stocks "selectively."

Intel Corp., which on Friday was 28 percent below its summer high, rose $3.75 to $75.625. Intel got an additional boost from expectations that its fourth-quarter profit report today will exceed forecasts. The world's largest computer chip maker is expected to earn 93 cents a share.

Microsoft Corp. rose $2.50 to $129.50.

Benchmark indexes in Asia tumbled after Hong Kong's Peregrine Investments Holdings Ltd., one of Asia's largest investment banks, said it would close. Peregrine was owed $400 million by Indonesian companies that couldn't pay back their dollar-denominated loans after the country's currency plummeted.

Hong Kong's Hang Seng index tumbled 8.7 percent to 8,121.06, its steepest drop in more than seven years, and Japan's Nikkei 225 index slid 2.2 percent to 14,664.44. Britain's FT-SE 100 Index slipped 1.4 percent, France's CAC 40 index fell 2.0 percent and Germany's DAX Ibis index fell 2.4 percent.

"I think it's going to take a while to work through," said Andrew M. Brooks, vice president in charge of equity trading at T. Rowe Price Associates in Baltimore, which oversees about $125 billion.

Banks with exposure to overseas economies slipped, fueling the market's initial tumble. J. P. Morgan & Co. fell $2.5625 to $103.1875; Citicorp lost $2.25 to $112.75; and BankAmerica Corp. fell $1.5625 to $62.625.

Intel, Oracle Corp., Dell Computer Corp., Cisco Systems Inc. and Phycor Inc. were the most active stocks in U.S. trading.

Pub Date: 1/13/98

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