Shares rebound, Dow gains 102 points Investors encouraged by earnings from Disney, Ford, Merck

January 28, 1998|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks recorded their biggest gain in a week yesterday after Walt Disney Co., Ford Motor Co. and Merck & Co. beat earnings forecasts, spurring optimism that a long-predicted slowdown in profit growth may not occur.

The Dow Jones industrial average rose 102.14, or 1.3 percent, to 7,815.08, led by Disney. The Standard & Poor's 500 index gained 12.07, or 1.3 percent, to 969.02, and the Nasdaq composite index climbed 17.44, or 1.1 percent, to 1,578.90.

Among other broad market indexes, the Russell 2,000 index of small capitalization stocks added 1.52 to 422.53; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq stock exchanges, climbed 92.67 to 9,215.96; the American Stock Exchange composite index rose 4.92 to 666.59; and the S&P 400 mid-cap index gained 1.45 to 319.74.

The yield on the benchmark 30-year bond rose 4 basis points to 5.93 percent.

Oil shares rallied as a conflict between Iraq and the United Nations intensified. The United States is considering a military strike on Iraq because of Baghdad's interference with United Nations weapons inspectors. A conflict in the Persian Gulf could limit oil supplies and drive oil prices higher.

Royal Dutch Petroleum Co. jumped $1.375 to $52.1875; Chevron Corp. gained 87.5 cents to $76.4375; Mobil Corp. climbed 68.75 cents to $68.3125; and Texaco Inc. rose 87.5 cents to $53.25.

Some 1,752 stocks rose and 1,201 fell on the New York Stock Exchange. About 687 million shares changed hands on the Big Board, 17 percent above the three-month daily average.

Disney jumped 5.375, or 5.5 percent, to a record 102.75. Before yesterday, the shares had been down 1.6 percent for the year.

Ford rose $1.625 to $49.875 after its earnings rose 38 percent on the strength of brisk sales of high-profit sport utility vehicles as well as a global cost-cutting campaign.

Merck rose 50 cents to $114.50 after its fourth-quarter profit topped estimates and revenue jumped 15 percent. The drugmaker cited rising sales of treatments for high-blood pressure and osteoporosis.

AT&T Corp. jumped $1.4375 to $63.125. On Monday, the long-distance phone company's shares fell 5.8 percent after reporting better-than-forecast fourth-quarter earnings.

Some 233 companies in the S&P 500 have reported earnings for the quarter ended Dec. 31. Of them, 47 percent topped estimates, 31 percent fell short of forecasts and the rest were in line. At this point last quarter, about 57 percent of the companies had beaten expectations and 25 percent were below.

Raytheon Co. gained $1.0625 to $53.0625 a day after the electronics company said fourth-quarter profit rose 38 percent. Last week, the company said it would cut 9,700 jobs as part of a restructuring of its business.

Compaq Computer Corp. was the most active stock in U.S. trading for a second day, after the company announced plans to buy Digital Equipment Corp. for $9.18 billion. Compaq could xTC slash 10,000 jobs from Digital's 55,000 work force, the Wall Street Journal reported. Compaq rose $1 to $30.

Yesterday's most-active stocks in U.S. trading after Compaq were Intel, Philip Services Corp., Microsoft Corp. and Ciena Corp.

Philip Services dropped $4.875 to $8.25 in trading of 12.8 million shares after the Hamilton, Ontario-based scrap-metal processor said it will take a charge of US$200 million to write off goodwill from recent acquisitions and reduce the value of its copper-scrap inventory.

Microsoft rallied a second day, gaining $3.4375 to $145.1875. On Monday, the company's board approved a 2-for-1 stock split.

Ciena fell $2.8125 to $51.6875 in trading of 11.3 million shares on news that rival Lucent Technologies Inc. unveiled new phone equipment that will let phone companies send about five times more information over fiber-optic cable than Ciena's. Lucent gained $1.50 to $84.4375.

American Home Products Corp. rallied $2.0625 to $92.5625 after the company said fourth-quarter profit rose 14 percent as increased sales of pesticides helped make up for the withdrawal of two popular diet drugs.

Ameritech Corp. gained 43.75 cents to $44.6875. The Baby Bell said it plans to triple revenue growth to about $300 million from new products and services in its core phone operations in 1998.

Estee Lauder Cos. rallied $2.125 to $52. The maker of Clinique and Estee Lauder makeup said fiscal second-quarter earnings rose 22 percent, boosted by higher U.S. sales of fragrances.

Pub Date: 1/28/98

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