Dow rises 125 points, as stocks rebound Lower profit projections in high-tech shares spark move to phones, drugs

Wall Street

March 07, 1998|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks rose yesterday as Intel Corp. and other beaten-up technology shares attracted buyers and some investors sought safety in telephone and drug shares.

Investors didn't take warnings of disappointing profits from computer-chip makers Intel and Motorola Inc. as signs of a major market slide. Recalling how quickly stocks recovered from their October rout, they jumped in and bought other companies that don't share the hazards of the computer business.

The Dow Jones industrial average rose 125.06, or 1.5 percent, to 8,569.39, erasing Thursday's loss. The Standard & Poor's 500 index gained 20.65, or 2 percent, to a record 1,055.69. The technology-heavy Nasdaq composite index, which on Thursday had its worst drop in two months, rose 41.57, or 2.4 percent, to 1,753.49.

Advancing stocks trounced decliners 3-to-1 on the New York Stock Exchange. Only five of the S&P 500's 90 industry groups declined as the index topped Tuesday's record by 3.67 points.

In other broad market indicators, the Russell 2,000 index of small capitalization stocks gained 6.9 to 463.72; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq exchanges, leaped 190.92 to 10,065.95; the American Stock Exchange composite index climbed 8.57 to 712.91; and the S&P 400 midcap index swelled 5.34 to 355.35.

Maryland stocks rose, led by Manugistics Group Inc., which gained $4.5938 to $38.8125, and Igen International Inc., which climbed $3.375 to $27.

Although computer-related shares rallied yesterday, they didn't quite make up for Thursday's decline. Compaq Computer Corp., the world's largest personal computer maker, said after the market's close that lackluster sales would make first-quarter earnings fall short of expectations. Compaq fell $2.25 to $25.375 in electronic trading after the close of the NYSE.

This week, the Dow average rose just 0.3 percent, the smallest gain this year. The S&P 500 rose 0.6 percent. The Nasdaq fell 1 percent, mostly because Intel's profit warning sent computer shares tumbling Thursday.

Intel Corp., which fell 13 percent Thursday after warning of disappointing first-quarter profits, rose $2.5625 yesterday to $78.125. Dell Computer Corp. gained $6.625 to $138.50, after falling 7 points Thursday. Dell then fell $8.25 to $130.25 after Compaq's warning, in trading after the close of the regular Nasdaq session at 4 p.m. Compaq rose 50 cents to $27.625 before its announcement.

Motorola, which warned yesterday that first-quarter earnings will fall short of expectations because of weak sales in Asia, lost $2.875 to $53.

Telephone shares gained as some investors sought refuge from the market's volatility in companies with no exposure to Asia. Bell Atlantic Corp. rose $3.0625 to $95.3125 and SBC Communications Inc. gained $2.50 to $77.625. The S&P telephone index gained 3.11 percent, its biggest rise since Sept. 16.

Drug shares also gained on optimism that they will be a safe haven from the market's volatility, and gained an extra boost from renewed takeover speculation.

Swedish drugmaker Astra AB said it's seeking a merger partner. Astra's American depositary receipts rose $1.1875 to $20.875.

Glaxo Wellcome PLC's ADRs rose 68.75 cents to $53.50 and SmithKline Beecham PLC ADRs rose $1.875 to $65 on speculation that Glaxo will make a takeover bid for SmithKline. The two companies ended merger talks Feb. 24 after failing to agree on who would run the combined company.

Other drugmakers also gained. Eli Lilly & Co. rose $1.75 to $66.125 and Schering-Plough Corp. rose $2.1875 to $74.375.

Columbia/HCA Healthcare Corp. rose $2.8125 to $29.1875 after the nation's largest hospital chain said its first-quarter earnings from continuing operations would be in the high end of analyst estimates.

Wal-Mart Stores Inc. rose $1.3125 to $50.1875 after the discount retailer said it will buy back an additional $1.6 billion in stock, bringing the total to $2 billion, as its shares reached a 52-week high. The company is also increasing its quarterly dividend 14 percent, to 7.75 cents from 6.75 cents.

Pub Date: 3/07/98

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