Stocks rise amid earnings optimism Dow industrials gain 8 points, to 8,944, are up 2.6% for the week

June 27, 1998|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks rose yesterday, lifting the Dow Jones industrial average for the fourth straight day on optimism that a growing economy with little inflation and low interest rates will boost corporate profits later this year.

The Dow rose 8.96 to 8,944.54. The Standard & Poor's 500 index rose 3.92 to 1,133.20, setting a record for the second time this week after spending two months in a rut. The Nasdaq composite index gained 6.28 to 1,869.53.

Among other broad market indexes, the Russell 2,000 index of small capitalization stocks rose .11 to 450.27; the Wilshire 5,000 index gained 25.70 to 10,617.67; the American Stock Exchange composite index climbed 3.91 to 717.87; and the S&P 400 midcap index added .52 to 357.49.

The Bloomberg Maryland index, which tracks the top 100 stocks in Maryland by market valuation, lost .72 to 231.65.

Cisco Systems Inc. rose $2.8125 to $89.875, giving it a 61 percent gain for the year. The provider of computer networking products is likely to post earnings growth of more than 30 percent in coming quarters, and will exceed most analysts' estimates, said Robert Natale, a money manager at Bear Stearns Asset Management Inc.

Gains were restrained by losses in AT&T Corp. and General Motors Corp. AT&T fell $1.625 to $56.75 after the largest U.S. long-distance phone company said its $48 billion purchase of Tele-Communications Inc. will dilute earnings for at least two years. The stock is down 12 percent since Tuesday, the day before it announced the purchase.

GM lost $1 to $66.875 as analysts recalculated how much the 22-day-old strike at the No. 1 U.S. automaker will hurt profits. Goldman, Sachs & Co. analyst James Irwin cut his second-quarter earnings estimate on GM to $1 a share from $2.40, and lowered his 1998 estimate to $7.40 from $8.50.

For the week, the Dow gained 2.6 percent, the S&P 500 added 2.9 percent and the Nasdaq jumped 4.9 percent.

Microsoft Corp. recovered from Thursday's decline, gaining $2.875 to $104.4375, up 10 percent for the week.

Advancing issues outnumbered decliners by an 8-to-7 margin on the New York Stock Exchange. More than 520 million shares changed hands on the NYSE, well below the daily average of 606 million shares for the past there months.

An estimated $5.3 billion flowed into U.S. equity funds in the week ended Wednesday, up from $2.8 billion a week earlier, according to Trim Tabs Financial Services, which tracks fund flows.

Adobe Systems Inc. fell $1.9375 to $42.4375 after the No. 1 maker of desktop software for sophisticated graphics said it earned more money than expected in its fiscal second quarter ended May 29. Adobe earned 43 cents a diluted share, down from 57 cents a share, excluding charges, a year earlier. Analysts expected 39 cents. Adobe rose $2.3125 to $44.375 Thursday in anticipation of the report.

Parametric Technology Corp. fell $4.6875 to $29.0625 on concern that the software company's efforts to reorganize its sales force and shift to a new product will cut into revenue. Goldman, Sachs & Co. analyst Laura Conigliaro cut her third-quarter revenue estimate for the maker of industrial design software to $292 million from $300 million.

Caribiner International Inc. fell $5.4375 to $17.0625 after the event producer said earnings this quarter will be below analysts' estimates. The company cited higher-than-expected costs in its audiovisual equipment services business, mostly because of problems integrating a company it acquired.

Guarantee Life Cos. fell $2.125 to $21.625 after the life and health insurance company said it expects second-quarter earnings excluding investment gains to be about 15 cents to 20 cents a diluted share, well below analysts' estimates of 42 cents. Guarantee Life said losses at its group dental business caused the shortfall.

Pub Date: 6/27/98

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