Stocks rally on rebound of yen with U.S. help Exporters benefit from brighter outlook for Asia

Dow gains 164

June 18, 1998|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks staged their biggest advance since February yesterday, as the U.S. government attempted to help Japan and other Asian nations rescue their ailing economies by selling dollars for yen.

The rebound in the Japanese currency to 136.37 to the dollar prompted gains in U.S. exporters such as American Express Co., United Technologies Corp. and DuPont Co. as the outlook for their earnings brightened.

Stocks have fallen in recent weeks as the tumbling yen threatened to delay Asia's recovery, which would damp demand for U.S. products from computers to elevators to financial services.

The Dow Jones industrial average rose 164.17 points, or 1.9 percent, to 8,829.46, its biggest gain since Feb. 2. The Standard & Poor's 500 index gained 19.52, or 1.8 percent, to 1,107.11, and the Nasdaq composite index climbed 23.28, or 1.3 percent, to 1,776.40.

Among other broad market indexes, the Russell 2,000 index of small capitalization stocks jumped 5.71 to 444.08; the Wilshire 5,000 index gained 172.90 to 10,386.99; the American Stock Exchange composite index climbed 6.61 to 695.27; the New York Stock Exchange composite index rose 9.73 to 568.65;and the S&P 400 midcap index added 4.21 to 352.92.

Maryland index gains

The Bloomberg Maryland index, which tracks the top 100 stocks in Maryland by market valuation, gained 3.20 to 228.09.

Advancing stocks led declining issues on the New York Stock Exchange by more than 2 to 1. About 721 million shares changed hands on the Big Board, the most since Feb. 2.

DuPont rose $2.50 to $74.8125. The largest U.S. chemical company said last month that weak Asian demand would make it difficult to meet its goal of boosting earnings by 10 percent this year.

United Technologies, which makes Otis elevators, rose $3.25 to $88.875. Weak Asian sales prompted the company to cut 2,000 jobs at Otis in April.

American Express rose $3.5625 to $104.9375. American Express would benefit from a more optimistic outlook in Asia, where it issues charge cards and offers private banking. The company also said it agreed to buy Havas Voyages, a French travel agency, for about 1 billion French francs ($167 million), reinforcing its position as Europe's largest business-travel operator.

Hewlett-Packard Co., up $2.625 in midafternoon, closed down 81.25 cents to $58.625 after Merrill Lynch & Co. analyst Steven M. Milunovich cut his near-term rating to "neutral" from "accumulate," citing concern that the Asian crisis will hurt Hewlett-Packard's sales and earnings. Asia accounts for about 15 percent of H-P's sales.

Internet firms surge

The slide helped drag the Dow average down from a 227-point gain, its biggest since Nov. 3.

America Online Inc. jumped $4.875 to $93.875. The Financial Times newspaper reported that the world's leading Internet service provider rejected a takeover bid by AT&T Corp. AT&T rose $1.0625 to $63.

Shares of other Internet companies also surged, on speculation that large media and entertainment companies will bid for them. Cnet Inc. rose $10.50 to $56; CyberCash Inc. gained $1.125 to $15.1875; EarthLink Network Inc. added $2.3125 to $60.3125; Excite rose $8.8125 to $76.125; Lycos Inc. rallied $2.75 to $59.50; and Yahoo! Inc. jumped $8.6875 to $130.625.

Amazon.com Inc. rose for a third day, climbing $5.375 to $79 after the No. 1 Internet bookseller said it will add music, book and movie reviews from closely held Muze to its Web site. Amazon is up 30 percent this week.

After the market closed, Oracle Corp., a database software company, reported earnings of 41 cents a diluted share, beating the estimate of 38 cents from analysts surveyed by IBES International Inc.

Oil stocks advanced, led by Texaco Inc., up $2.875 to $60.6875, and Mobil Corp., up $2.3125 to $77.5625. Companies that drill for oil and gas also rose. R & B Falcon Corp. rose $1.875 to $23.625 and Rowan Cos. gained 62.5 cents to $21.6875.

Kulicke & Soffa Industries Inc. dropped $1.3125 to $14.3125 after the semiconductor-equipment maker said sales will decline in the second half of 1998. The company also said its loss in the quarter ended June 30 will exceed the loss of 3 cents a share predicted by analysts.

The warning followed others this quarter in the computer industry. Intel Corp. and Hewlett-Packard Co. both said earnings would suffer because of slack demand from Asia and tough competition in the United States.

Investors should still avoid U.S. commodity companies that will continue to be hurt by the weak demand and cheap exports coming out of Asia, said Michael Weiner, a portfolio manager at Banc One Investment Advisors Corp., which manages $52 billion.

Pub Date: 6/18/98

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