Markets regain some of Monday's huge losses Dow rises 37.36, having fallen 207 points

shares in oil, computers rebound

Wall Street

June 17, 1998|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks yesterday erased part of Monday's losses as European and some Asian markets stabilized. Oil and computer stocks, which suffered the most in the decline, led the gains.

Bond yields near record lows and the plunge in U.S. stocks made equities look attractive, analysts said.

Intel Corp., which began the day down 29 percent from its high this year, rose $2.9375 to $69.8125. A 3.6 percent rebound in the price of oil sent Mobil Corp., down $2.8125 Monday, up $1.50 yesterday to $75.25.

The Dow Jones industrial average rose 37.36 to 8,665.29, after tumbling 207 points Monday. The Standard & Poor's 500 index rose 10.58 to 1,087.59 and the Nasdaq composite index, heavily weighted with computer companies, soared 37.37, or 2.2 percent, to 1,753.12, more than recouping Monday's 29-point decline.

Among other broad market indexes, the Russell 2,000 index of small capitalization stocks rose 4.51 to 438.37; the Wilshire 5,000 index gained 108.64 to 10,214.09; the American Stock Exchange composite index climbed 4.78 to 688.66; the S&P 400 midcap index added 3.78 to 348.71; and the NYSE composite index rose 4.03 to 558.92.

The Bloomberg Maryland index, which tracks the top 100 stocks in Maryland by market valuation, rose 1.08 to 224.89.

Advancing stocks outnumbered decliners by a 3-to-2 ratio on the New York Stock Exchange. Volume on the Big Board totaled 663 million shares, 9 percent above the three-month daily average.

Oil and oil service stocks did better as the price of crude oil rose from a 12-year low. Kuwait, the United Arab Emirates and Oman said they would cut output by 170,000 barrels a day to ease a world oil glut.

Noble Drilling Corp. rose $1.375 to $24.25. British Petroleum PLC's American depositary receipts rose $3.125 to $86.125.

Battered computer stocks gained. Dell Computer Corp., down 18 percent in a month, rose $4.7188 to $84.9688 and Microsoft Corp. rose $3.9375 to $89.875. Intel, Dell and Microsoft were the most active stocks on U.S. exchanges.

European and some Asian markets recovered, helping U.S. stocks. Britain's FT-SE 100 index rose 0.2 percent, Germany's DAX Xetra index gained 0.7 percent and France's CAC 40 index rose 0.2 percent. Hong Kong's Hang Seng index rose 0.9 percent.

Other markets in Asia fell. South Korea's benchmark index lost 2.9 percent and Malaysia's dropped 3.6 percent to a nine-year low.

International Business Machines Corp., fell $2.25 to $110 on concern that it will get fewer dollars toward overseas earnings because of the dollar's strength.

Steven Milunovich, a Merrill Lynch & Co. analyst, cut his earnings estimates on the world's largest computer maker, saying the strong dollar could cut revenue growth by 3.5 percent. The company also faces weak demand in Japan, he said.

Unfavorable exchange rates also figured in warnings by Geon Co. and Albany International Corp. that second-quarter profit will fall short of estimates. Geon, which makes polyvinyl chloride, fell 93.75 cents to $20. Albany, a maker of fabric conveyor belts used in papermaking machines, fell $1.6875 to $24.3125.

Other companies with significant overseas sales also got hurt by concern about the effect of the strong dollar.

Coca-Cola Co., which gets 80 percent of its profits from outside the U.S., lost 31.25 cents to $79. Douglas M. Lane, another Merrill Lynch analyst, trimmed his estimate for the company's 1998 per-share earnings to $1.60 from $1.62 and cut his 1999 estimate to $1.80 to $1.85, from $1.90.

The dollar traded at 143.47 yen, down from 146.15 yen Monday.

Manpower Inc. fell $10.50 to $27.6875 after the U.S.'s largest temporary-employment company said it expects second- quarter earnings to fall below last year's because of rising operating costs worldwide and higher social security costs in France.

Springs Industries Inc. fell $7.50 to $48.75 after the home furnishings maker said second-quarter earnings will be less than half of last year's 81 cents a diluted share before unusual items, because of an expected charge of 24 cents from amounts owned by customers of its window-fashions business.

Sunbeam Corp. fell $1.875, or 12 percent, to $13.875, adding to Monday's 13 percent loss after the maker of grills, blenders and Mr. Coffee machines said it will lose money for the second straight quarter. "Chain Saw" Al Dunlap, Sunbeam's chairman and chief executive, was fired over the weekend. The shares have fallen for eight straight days and are down 67 percent for the year.

Weyerhaeuser Co. fell $1.1875 to $45.875 after the No. 3 U.S. paper and wood products company scheduled a conference call to discuss market conditions and the Asian economic crisis. After the market closed, the company said second-quarter earnings will be significantly below estimates because of the Asian economic slowdown.

U.S. Rentals Inc. rose $3.3125 to $33.50 after it agreed to be acquired by its rival, United Rentals Inc., for $1.24 billion in stock and assumed debt to form the largest equipment-rental company in North America. United Rentals will pay $32.12 in stock for each U.S. Rentals share. United rose $2.375 to $35.75.

Pub Date: 6/17/98

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