Hopes for rate cut sustain stock rally Dow gains 79.04, 408 over three days

S&P 500 rises 7.96

Nasdaq up 12.42

Wall Street

September 16, 1998|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks rose yesterday for a third day on expectations that lower interest rates will help spur earnings growth even as economies slow.

The Dow Jones industrial average rose 79.04 to 8,024.39, bringing its three-day gain to 408 points, or 5.4 percent.

The Dow is down 14 percent from its July 17 high.

The Standard & Poor's 500 index gained 7.96 to 1,037.68 and the Nasdaq composite index climbed 12.42 to 1,678.11.

Among other broad indexes, the Russell 2,000 index of small capitalization stocks inched up .01 to 357.73; the Wilshire 5,000 index gained 75.09 to 9,453.67; the American Stock Exchange composite index added 4.98 to 624.28; and the S&P 400 midcap index rose 1.76 to 308.50.

The Sun-Bloomberg Maryland index, which tracks the top 100 Maryland stocks by market valuation, edged up .90 to 180.34.

Rising shares outpacing decliners by a 17-to-13 ratio, as investors shunned shares of companies whose earnings are likely to fall short of expectations.

About 720 million shares changed hands on the Big Board, above yesterday's 711 million. Some 548 stocks sank to 52-week lows, while 50 touched highs for the year.

Investing analysts attributed some of the recent market swings to stock futures and options expiration.

Financial services firms and banks such as Morgan Stanley Dean Witter & Co. and Fleet Financial Group Inc. led the gains. Morgan Stanley climbed $3.1875 to $56.3125, Fleet gained $2.6875 to $77.25 and American Express Co. rose $3.1875 to $84.875.

BankAmerica Corp. fell $1 to $62.8125 after warning of a larger loss than previously disclosed from trading securities, mostly in Russia.

Providian Financial Corp. shares soared $11.50 to $72.9375 after the credit card company's chairman said it could increase earnings by as much as 50 percent this year and next, more than analysts are forecasting.

Merck & Co. rose $3.50 to $135.50 and Eli Lilly & Co. rose $1.125 to $77.3125.

Merck is now within striking distance of its July 20 record close of $138.375, after losing 16 percent.

Coca-Cola Co. fell $2.125 to $61.1875 after Michael Branca, an analyst at Lehman Brothers Inc., cut his 1999 earnings estimate to $1.73 a share from $1.86 because of slowing sales in Eastern Europe, Latin America and Asia.

PepsiCo Inc. fell $1.3125 to $30.

Swiza Food Corp., one of the largest U.S. dairy companies, tumbled $9.6875 to $30.0625 after warning that "unprecedented increases" in butterfat prices will cause it to earn 75 to 78 cents a share in the third quarter, and about the same amount in the fourth, less than analysts expected.

Other companies that warned profits may not meet expectations include Burr-Brown Corp., down 50 cents to $13; Cylink Corp., down $2.75 to $5.125; Rainforest Cafe Inc., down $1.8125 to $6.3125; and Wet Seal Inc., down $5.1875 to $14.5625.

Cummins Engine Co. fell $7.50 to $35.25 after the diesel engine maker said revenue in the third quarter will be 7 to 10 percent below the second quarter's because of slower sales worldwide. It will take a charge of $145 million in the third quarter.

Northern Telecom Ltd., the No. 2 seller of phone equipment in North America, fell $2.50 to $43.75 after it said it will fire about 3,500 workers, or 4 percent of its worldwide work force, and focus the company on the faster-growing data market.

Rival Lucent Technologies Inc. fell $2.375 to $74.50.

WorldCom Inc. fell $2.25 to $45.50 a day after it completed its $47 billion purchase of MCI Communications Corp.

RJR Nabisco Holdings Corp., which replaces MCI in the S&P 500 after the market's close yesterday, gained $2.5625 to $26.5625.

Banc One Corp., up 93.75 to $45.25, replaced MCI in the S&P 100.

Pub Date: 9/16/98

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