Stocks rise, with Dow jumping 95 points AT&T falls $5.375, but its deal for TCI boosts entire market

Wall Street

June 25, 1998|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks advanced again yesterday, this time boosted by telecommunications equipment makers, after AT&T Corp.'s agreement to buy Tele-Communications Inc. sparked expectations that demand for their products will increase as the industry becomes more competitive.

The Dow Jones industrial average rose 95.41, to 8,923.87, bringing its gain since Monday to 212 points. The gain came even as AT&T, one of the 30 Dow stocks, fell $5.375, to $60, its biggest loss since Oct. 27, after warning that the TCI acquisition will hurt its earnings for three years.

The Standard & Poor's 500 index rose 13.39, to 1,132.88, its first record in two months. The Nasdaq composite index, loaded with telecommunications equipment stocks, rose 33.19, to 1,877.76.

Among other broad market indexes, the Russell 2,000 index of small capitalization stocks rose 3.89, to 451.31; the Wilshire 5,000 index gained 118.17, to 10,620.96; the American Stock Exchange composite index climbed 10.88, to 709.48; and the S&P 400 midcap index added 1.77, to 357.48.

The Bloomberg Maryland index, which tracks the top 100 stocks in Maryland by market valuation, climbed 1.82, to 232.83.

Advancing stocks outnumbered decliners by 17 to 13 on the New York Stock Exchange. NYSE volume totaled 682 million shares, above the three-month daily average of 607 million.

TCI, the nation's second-largest cable company, rose $1.0625, to $39.75 in trading of almost 45 million shares, making it the most active issue on U.S. exchanges.

Other cable stocks also rallied. Cablevision Systems Corp. jumped $14, to $76; Time Warner Inc. rose $5.125, to $88.375; and Adelphia Communications Corp. gained $4, to $33.75.

At Home Corp. shares soared $11.9375, to $51.1875. With its acquisition of TCI, AT&T will receive TCI's 39.1 percent stake in At Home, which stands to benefit from AT&T's deep pockets as it expands its Internet services.

Equipment makers were big winners. ADC Telecommunications rose $3, to $35.625; Scientific Atlanta Inc. jumped $2.125, to $24.0625; Tellabs Inc. gained $4, to $73.375; and General Instrument Corp., a maker of digital cable boxes, added $2.9375, to $26.125. Northern Telecom rose $2.3125, to $56.0625. Lucent rose $1.625, to $80.125.

All the Baby Bells fell on the prospect of AT&T's assault on their local telephone market via TCI's cable lines. Bell Atlantic Corp. dropped $5.875, to $92.50; SBC Communications Inc. fell $1.50, to $39.75;, Ameritech Corp. lost $2.375, to $42.50; BellSouth Corp. fell $2.25, to $67; and US West Inc. slid $1.625, to $48.6875.

NationsBank Corp. rose $2.75, to $77.50, leading a rally in bank shares. Bank earnings, at record levels already, are expected to rise 12 percent in the second quarter.

Merck & Co. rose $3.9375, to $131.25, leading the Dow's gain. The drug maker's sale to DuPont Co. of its half of their pharmaceutical joint venture for $2.6 billion was cleared by European Union regulators.

Microsoft Corp. rallied for a ninth day, bringing its gain for that period to 23 percent. The No. 1 maker of personal computer software unveils its Windows 98 operating system tomorrow, two days after a U.S. appeals court ruled that it can integrate its Internet browser in Windows 95. The stock rose $4.1875, to a record $104.9375.

Computer stocks jumped at the opening, gave up most of the gains at midmorning and moved higher again before noon.

Intel Corp. rose $2.125, to $77.375, and Compaq Computer Corp. gained $1, to $29.375. Eaton Corp. fell $3.4375, to $78.8125 after warning that it will lose up to $50 million this year because of slow sales in its semiconductor equipment unit.

Bear Stearns Cos. rose $4.25, to $58.50; SLM Holding Corp. gained $2.4375, to $46.50; and Capital One Financial Corp. rose $4.3125, to $114.875. All three will be added to the S&P 500 after the close of trading June 30.

Pub Date: 6/25/98

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