Dow claws most of way back from selloff

Index shakes off Rubin resignation, closes down 25

Wall Street

May 13, 1999|By BLOOMBERG NEWS

NEW YORK -- The Dow Jones industrial average closed down 25 points yesterday after it erased almost all of the 213-point plunge that followed the resignation of Treasury Secretary Robert E. Rubin.

"Secretary Rubin was viewed as a major positive for credibility to the financial policy of the current administration," said Henry Cavanna, a money manager for J. P. Morgan Investment Management Inc., which oversees $320 billion.

Still, he said, "The underlying strength of the economy is more important. The stock market, fiscal policy, and economic policy are not driven by one person -- even that person."

Chevron Corp. slumped as gasoline fell to a one-month low, contributing the most to the Dow average's 25.78-point loss to 11,000.37.

The Nasdaq composite index gained 39.86, or 1.5 percent, to 2,606.54, led by Cisco Systems Inc., after the No. 1 maker of Internet equipment beat profit forecasts and announced a 2-for-1 stock split. The Standard & Poor's 500 index gained 8.39 to 1,364.00.

Elsewhere on the broad market, the New York Stock Exchange composite index rose 1.91 to 647.68; the American Stock Exchange composite index soared 9.06 to 798.35; and the S&P 400 midcap index added 2.57 to 407.75. All set records for the second straight day. The Wilshire 5,000 index climbed 75.42, to a record 12,510.39.

The Russell 2,000 index, a benchmark of small-cap stocks, gained 2.45 to 449.26, and the Sun-Bloomberg Maryland index gained 1.89 to 244.60. Seventeen stocks fell for every 13 that rose on the New York Stock Exchange, where trading volume was about 834.2 million shares.

Cisco gained $6.875 to $118.75 after reporting a third-quarter profit of 38 cents a share, a penny higher than forecast, and announcing a 2-for-1 stock split. Competitor Lucent Technologies Inc. rose $1.75 to $61.875.

Oil stocks fell as gasoline dropped more than 4 percent, its biggest drop in a month, after a report showed U.S. refiners have sufficient supplies to meet a peak in seasonal demand. Chevron slid $3 to $95.0625; Exxon Corp. slipped $2.5625 to $79.0625; and Mobil Corp. lost $3.8125 to $98.50.

International Business Machines Corp., up $4.50 to $225.50, contributed the most to the Dow average's rebound, rallying for a fourth straight day, ahead of the computer maker's meeting with investors and analysts. Chief Executive Officer Louis Gerstner thrilled investors with better-than-forecast earnings last month, sending the stock up 31 percent.

Gerstner, speaking to financial analysts in New York after U.S. markets closed, said IBM gets $20 billion from electronic business, about a quarter of its annual revenue, and the company did $4.5 billion in Web commerce in the first quarter. Earlier, IBM said it will make chips for Nintendo Co. in a $1 billion contract that gives IBM more clout in the market for non-PC computing devices.

Time Warner Telecom Inc. jumped $6.75 to $20.75 in its first day of trading, after raising $252 million in an initial stock sale. The Greenwood Village, Colo.-based provider of local telephone and other telecommunications services sold 18 million shares at $14, above the $9 to $11 a share expected last week.

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