Stocks hit records as profit fears ease Some computer shares rebound

Dow closes above 8,600 for first time

March 11, 1998|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks rose to records yesterday on optimism that the disappointing profits of some computer-related companies won't stop the bull market.

The biggest gainers included Sun Microsystems Inc., which fell 19 percent over the past three sessions in a computer rout triggered by warnings from Intel Corp. and Compaq Computer Corp.

The Dow Jones industrial average rose 75.98 to 8,643.12, its first close above 8,600. The Standard & Poor's 500 index rose 11.94 to a record 1,064.25 in a broad advance led by drug, oil, bank, computer and construction shares.

The Nasdaq composite index, laden with computer-related shares, rose 23.35 to 1,748.51, about 29 points below its all-time high.

Among other broad market indexes, the Russell 2,000 index of small capitalization stocks rose 3.50 to 464.62, less than six-tenths of a point from its Oct. 13 record; the Wilshire 5,000 index of stocks on the New York, American and Nasdaq exchanges, climbed 108.02 to a record 10,140.43; the American Stock Exchange composite index gained 3.38 to 712.69; and the S&P 400 midcap index added 4.17 to 357.82, also a record.

Sun Microsystems rose $4.6563 to $42.4375 after several analysts raised or reiterated their ratings for the maker of workstations and computers on indications from the company that it expects to match or come close to Wall Street forecasts.

New York Stock Exchange advancers outnumbered decliners 1,932 to 1,041.

Compaq fell 6.25 cents to $25.375. Intel rose 43.75 cents to $75.50 and Dell Computer Corp. rose $2.0625 to $65.1875, after dropping 6.25 cents Monday.

Brokerages were among the best-performing yesterday, with the AMEX securities broker/dealer index gaining 1.7 percent. Travelers Group Inc. led the Dow average higher, climbing $2.25 to $57.75. Lehman Brothers Holding Inc. jumped $3 to $69.75; Morgan Stanley, Dean Witter, Discover & Co. gained $2.4375 to $74.1875; and Bear Stearns Cos. rose $1 to $49.75. All four reached records.

Oil companies, which have lagged behind other stocks this year, rose as investors shifted from riskier computer-related shares to dependable stocks with high dividends and room to grow. Shares have been depressed by low crude oil prices and are expected to rise whenever oil does.

Mobil Corp., which pays a 3.14 percent dividend, is up just 0.5 percent year to date, even after yesterday's 2.5 percent gain. Texaco Inc., which pays a 3.09 percent dividend, climbed 4.5 percent yesterday, bringing its year-to-date gain to 7 percent. By contrast, the S&P 500 rose 9.7 percent this year and pays a combined dividend of just 1.44 percent.

Airlines are among the companies benefiting now from low fuel prices. Continental Airlines Inc.'s Class B shares soared 6 percent after a Morgan Stanley analyst upgraded the stock because of lower fuel prices and higher revenue.

Jet fuel prices are down to about 43 cents a gallon, from 63 cents a gallon in October. US Airways Group Inc. climbed $1.4375 to $73.8125. UAL Corp., parent of United Airlines, rose $2 to $87.50.

Foster Wheeler Corp. rose $1.1875 to $26.4375 after it was awarded a $136 million contract to build a steam plant in Ohio.

Fluor Corp. rose $1.4375 to $49.50 after the construction and engineering company said it will put its equipment leasing-unit up for sale, a plan it first floated last year. Fluor said it plans to use proceeds from the sale to buy back shares as part of an existing stock repurchase system.

AT&T Corp. rose $1.4375 to $62.6875 after Citicorp awarded it a five-year, $750 million contract to streamline the bank's computer systems.

AT&T also benefited from a Wall Street Journal report that MCI Communications Corp.'s acquisition by WorldCom Inc. might run into trouble with Justice Department antitrust regulators. MCI fell $1.3125 to $46 and WorldCom fell 62.5 cents to $37.875.

Pub Date: 3/11/98

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