Stocks rise as Dow rebounds 90 points Beaten-down shares attract buyers

Russell 2,000 jumps 7.9%

Wall Street

August 13, 1998|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks rose yesterday, recovering part of Tuesday's losses, as investors scooped up beaten-down shares on speculation that prices had fallen further than justified by the effects on profits of Asia's slump.

The Dow Jones industrial average rose 90.11 to 8,552.96, after falling 112 points Tuesday on concern that Japan's deepening recession might hurt profits for companies that do business in Asia. The Standard & Poor's 500 index gained 15.24 to 1,084.22, and the Nasdaq composite index jumped 32.83 to 1,825.53.

Regional bank shares such as Banc One Corp., which had lost 27 percent in the four weeks ended yesterday, led the gains.

Banc One gained $1.5625 to $46.0625; Norwest Corp. rose 56.25 cents to $33.6875; and Comerica Inc. rose $1.8125 to $60.8125.

Small stocks, which were the worst hurt in the recent slump, were among yesterday's biggest gainers. The Russell 2,000 index rose 7.95 to 408.55, led by Excel Realty Trust Inc., a shopping-center property owner that raised its dividend yesterday. A week ago, the Russell traded 20 percent below its April 22 record.

Among other broad indexes, the Wilshire 5,000 gained 145.69 to 10,088.31 yesterday; the American Stock Exchange composite index climbed 9.53 to 668.80; and the S&P 400 midcap index added 6.86 to 335.08.

The Sun-Bloomberg Maryland index, which tracks the top 100 Maryland stocks by market valuation, rose 2.77 to 208.48.

More than two stocks rose for every one that declined on the New York Stock Exchange, where 708 million shares changed hands, above the daily average of 626 million shares over the past three months.

Cendant Corp., a brand-franchising and shopping club company, rose $2, or 14 percent, to 16.125 after the company said it would sell its Hebdo Mag International unit and said it would consider the sale of its consumer software business. The company is trying to recover from accounting fraud that has forced it to restate earnings.

MidAmerican Energy Holdings Co., Iowa's largest power company, surged $5.25 to $25.25 after CalEnergy Co. agreed to buy it for $4 billion in cash, assumed debt and preferred stock. CalEnergy will pay $27.15 per MidAmerican share. CalEnergy rose $1.5625 to $28.

GeoCities, a company that lets Internet users set up their own sites on the World Wide Web, rose $8.1875 to $45.50 in its second day of trading, as investors continued to clamor for its shares. The stock soared $20.3125 Tuesday after its initial stock sale.

Paine Webber Group Inc. rose $4.25 to $52.625 on a report that Dresdner Bank AG, Germany's second-largest bank, has made "a preliminary overture" to buy the fourth-biggest U.S. brokerage for up to $10 billion.

Computer-related stocks, among the worst performing groups of big stocks Tuesday, rebounded yesterday. Microsoft Corp. gained $1.625 to $105.0625; 3Com Corp. climbed $2.625 to $30; and Hewlett-Packard Co. rose $1.875 to $52. Intel Corp. added $1.0625 to $85.625 and was the most actively traded U.S. stock, with 13.7 million shares changing hands.

Seagate Technology Inc. rose $2.1875 to $25.125 to lead a surge in computer disk drive makers, after analyst Daniel Niles at BancAmerica Robertson Stephens Inc. said disk drive sales are picking up. Quantum Corp. rallied $1.50 to $17.125 and Read-Rite Corp. gained 62.5 cents to $7.50.

Abercrombie & Fitch Co. rose $1.5625 to $51.4375. The clothing retailer's earnings for the second quarter rose fivefold from a year earlier.

Applied Materials Inc. fell 75 cents to $32.125. The No. 1 maker of equipment to produce computer chips said fiscal third-quarter profit fell 51 percent as sales tumbled amid Asia's economic slump and lackluster demand for semiconductors.

Adobe Systems Inc. fell $3.4375 to $27.375 after the maker of desktop graphics software said it may report a loss for the third quarter and will dismiss up to 300 employees, or 10 percent of its work force, demand for its products also diminished by the Asian slump.

Three top executives resigned.

CheckFree Holdings Corp. plunged $9.8125 to $13.9375 after the maker of electronic data payment and collection systems said fiscal 1999 earnings will be about half of analysts' estimates and revenue will be about $20 million less than expected, because of slow sales.

Samsonite Corp., the world's largest luggage maker, fell $1.9375, or 16 percent, to $5.75, adding to Tuesday's 14 percent drop. The company said poor wholesale sales, Asia's difficulties and a computer snafu will result in lower earnings in its second quarter ended July 31 than the company previously forecast.

Germany's DAX Xetra index gained 1.9 percent and France's CAC 40 index rose 2.6 percent, though Russia's RTS Trading System index lost 1.6 percent. Japan's Nikkei 225 index fell 0.18 percent to 15,378.97 and Hong Kong's Hang Seng index rose 1.17 percent.

Pub Date: 8/13/98

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