Telephone stocks fall, oil shares advance Rise in crude prompted by threat of U.S. strike against Iraq

Dow gains 12

January 27, 1998|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks were mixed yesterday as a rally in crude oil spurred gains in Exxon Corp. and other producers, and AT&T Corp. led a decline in telephone company shares.

The Dow Jones industrial average rose 12.20 to 7,712.94. Exxon gained $1.1875 to $60.25 and Chevron Corp. rose $1.5625 to $75.5625 as the price of crude oil climbed $1.08 to $16.82 a barrel. The rise in crude was prompted by reports that the United States is considering a military strike against Iraq because the nation is refusing to cooperate with United Nations weapons inspectors.

The Standard & Poor's 500 index fell 0.64 to 956.95, and the Nasdaq composite index dropped 14.47, or 0.9 percent, to 1,561.46.

Among other broad market indexes, the Russell 2,000 index of small capitalization stocks slid 3.80 to 421.01; the Wilshire 5,000 index of stocks on the New York, American and Nasdaq stock exchanges dropped 23.05 to 9,123.34; the American Stock Exchange composite index lost 0.04 to 661.67; and the S&P 400 midcap index slipped 1.65 to 318.29.

AT&T fell $3.8125 to $61.6875. The company's fourth-quarter profit topped estimates, but much of the gain came from cost cutting rather than a pickup in business. Chief Executive C. Michael Armstrong told investors the company will slash as many as 18,000 jobs, or about 14 percent of the work force.

AT&T's competitors fell on news that the company's long-distance revenue fell 2.3 percent. Sprint Corp. fell $1 to $59.0625; MCI Communications Corp. slid 75 cents to $45.125; and WorldCom Inc. fell 75 cents to $33.125.

After the market closed, AT&T said it expects 1998 earnings of between $3.25 and $3.35 a share, above the average forecast of $2.98. The company predicted revenue would grow 2 percent to 4 percent this year.

Declining stocks outnumbered advancers 1,556 to 1,316 on the New York Stock Exchange. About 556 million shares changed hands on the Big Board, 5 percent below the three-month daily average.

United Technologies Corp. was one of the day's biggest gainers, rallying $3.625 to $78.3125. The maker of jet engines, elevators and air conditioners reported unexpectedly strong earnings last week.

Expectations for strong earnings sent Merck & Co. up $1.0625 to $114. Merck is expected to report fourth-quarter profit of $1.03 diluted share before the opening of trading today.

A round of mergers and acquisitions helped spur some stocks higher. Digital Equipment Corp. soared $10 to $55.4375 after Compaq Computer Corp. said it will buy the company for $9.6 billion in cash and stock, becoming the second largest computer company after International Business Machines Corp. Compaq's share price dropped $2.75 to $29.

Energy Group PLC's American depositary receipts rose $2.5625 to $47.9375 after the United Kingdom power company said it received approaches from unnamed companies that may lead to a takeover offer topping a lapsed $9.7 billion bid from U.S.-based energy producer PacificCorp.

Tobacco shares fell on concern that a $368.5 billion settlement with the government won't be cleared by Congress in its current form. Philip Morris Cos., which produces Marlboro cigarettes, fell 56.25 cents to $42.125 and RJR Nabisco Holdings, the maker of Camel cigarettes, slid $2.3125 to $31.5625. Nabisco Holdings Corp., a food company that is 80.5 percent-owned by RJR Nabisco, warned that 1998 profit will be little changed, causing its shares to fall $5.75 to $39.

Microsoft Corp. rallied $3.50 to $141.75 after the Redmond, Wash., software company said it will split its stock 2-for-1. The split is payable on Feb. 20 to shareholders of record Feb. 6.

ADC Telecommunications Inc. plunged $11.0625 to $17.0625 in trading of nearly 23 million shares, more than 12 times the three-month average, after the company warned that fiscal first-quarter profit will be stagnant because of reduced demand and slower sales in Asia.

Vestcom International Inc. dropped $11.625 to $7.25 after the data printing company warned that earnings will be lower than expected in the next six to nine months as it meshes newly acquired Creative Data Services Inc. and Business Mail Express into its business.

Pub Date: 1/27/98

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