Stocks rise as Dow leaps 116 points But weakness in computer shares sends Nasdaq lower

May 21, 1998|By BLOOMBERG NEWS

U.S. stocks rose for a second day yesterday as investors snapped up shares of McDonald's Corp., PepsiCo Inc. and other consumer businesses with dependable earnings.

That strategy came at the expense of Intel Corp., Microsoft Corp. and other computer-related stocks whose profits may suffer later this year from cutthroat competition in the technology industry. Computer shares have helped fuel a 15 percent rally in U.S. stocks this year.

The Dow Jones industrial average surged 116.83, or 1.3 percent, to 9171.48 yesterday, its biggest gain since April 2. McDonald's was the Dow's biggest gainer, rallying $3.0625 to $65.875 after chief executive Jack Greenberg said late Tuesday that he expects the world's largest restaurant company to have a "very strong" second quarter, partly because of rising U.S. sales.

The Standard & Poor's 500 index gained 9.54, or 0.9 percent, to 1119.06, spurred by PepsiCo's jump of $2.5625 to $40.50 on optimism that its soda business will return to double-digit profit growth next year.

The Nasdaq composite index -- packed with computer-related shares -- fell 14.12, or 0.8 percent, to 1,831.75.

Intel Corp., Gateway Inc. and International Business Machines Corp. fell after Dell Computer Corp.'s first-quarter earnings failed to beat analysts' estimates by as much as some investors had hoped.

Among other broad market indexes, the Russell 2,000 index of small capitalization stocks fell 2.32 to 468.54; the Wilshire 5,000 index gained 54.08 to 10,588.05; the American Stock Exchange composite index fell 0.47 to 732.22; the S&P 400 midcap index fell 1.42 to 366.97; and the NYSE composite index rose 4.71 to 578.63 .

The Bloomberg Maryland index, which tracks the top 100 stocks in Maryland by market valuation, fell 0.97 to 236.88.

Advancing and declining stocks were almost evenly matched on the New York Stock Exchange, where about 597 million shares changed hands.

Bank stocks were among the best performers for a second day, sending the Keefe, Bruyette & Woods bank index up 1.5 percent, its biggest gain since May 1.

Bank of New York Co. rallied $1.375 to $61.375 after the company withdrew its unsolicited $22.3 billion takeover offer for Mellon after the bank's request to meet with Mellon's board was rejected. Mellon fell $2.25 to $67.75.

Brokerage shares rallied as a report that ABN Amro Holding NV is in talks to buy Bear Stearns Cos. fueled speculation of a new round of mergers in the securities industry.

ABN Amro denied the report, Bear Stearns President James Cayne said the firm doesn't comment on rumors.

Bear Stearns rose $3.125 to $56; Merrill Lynch & Co. rose $5.0625 to $92.8125; PaineWebber Group Inc. rose $2.3125 to $44.50.

Some of the newest stocks on the market were in demand.

ResortQuest International Inc. rallied 41 percent to $15.50 a day after selling 5.8 million shares at $11 in an initial public offering.

Paging companies dropped. A PanAmSat Corp. satellite spun out of control late Tuesday, leaving millions of U.S. paging and other customers without service -- some for the next week.

Northern Telecom Ltd. surged $3.50 to $68.4375. The company won a contract to sell $1.5 billion of digital wireless equipment to SBC Communications Inc. over the next five years.

Nordstrom Inc. was the biggest gainer in the S&P 500, rising $4.75 to $72.625. Nordstrom's board approved a 2-for-1 stock split.

Maryland stocks fell, led by Manugistics Group Inc. and Healthcare Financial Prtnrs. Manugistics Group fell $2.9375 to $56.75. Healthcare Financial Prtnrs. fell $2.125 to $46.75.

The yield on the benchmark 30-year Treasury bond fell to 5.89 percent from 5.93 percent.

Pub Date: 5/21/98

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