Stocks rise, but slump from highs of the day

Dow adds 31.66 points

bonds retreat on eve of consumer price report

June 16, 1999|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks rose yesterday, though they lost most of the gains in late trading as bonds retreated before today's consumer price inflation report.

"The market is really jumpy" about the CPI report, said Jerry Stodden, a money manager at the Chicago Trust Co. "People can no longer count on interest-rate declines as a major motor in the stock market."

The Dow Jones industrial average rose 31.66, or 0.3 percent, to 10,594.99, giving up most of a 118-point gain. The Standard & Poor's 500 index advanced 7.16, or 0.6 percent, to 1,301.16, led by semiconductor makers and oil producers. The Nasdaq composite index rose 16.36, or 0.7 percent, to 2,414.67 Eight stocks rose for every seven that fell on the New York Stock Exchange.

Maryland stocks fell, led by Information Resource Engineering Inc. and RWD Technologies Inc. Information Resource fell $3.59 to $26.34, while RWD declined $3 to $9.75.

The Sun-Bloomberg Maryland index, a price-weighted list of companies with operations in the region, fell 0.67 to 187.10.

Oracle Corp. rose to $28.50 in trading after the close of exchanges, from $25.13, after beating profit estimates by 4 cents a share in a report released after the market's close. The No. 1 database software maker posted a profit of 36 cents a share, up from 27 cents in the year-ago period. The stock fell $1.3125 on the Nasdaq stock market.

Semiconductor stocks rallied after Merrill Lynch & Co. analyst Joseph Osha raised his estimate for the growth rate in semiconductor revenue this year to 15.5 percent from 12 percent. Demand for computer chips from the telecommunications industry "is the driving force behind our improved numbers," he wrote in a report to clients. Osha raised his stock-price forecast for seven companies that make chips for communications.

Among those stocks, Texas Instruments gained $5.44 to $134.69, Broadcom Corp. jumped $9.63 to $110.63 and Vitesse Semiconductor Corp. rose $1.56 to $63.13.

Oil companies rose with crude and gasoline futures on expectations that a weekly inventory report will show growing demand for motor fuel as warmer weather encourages more people to drive.

Exxon rose $1 to $82.13, Texaco Inc. gained $2.06 to $65.56 and Mobil Corp. climbed $1.13 to $104.50.

Stocks had been sliding since the April consumer price index report, which showed prices rose faster than expected and led investors to conclude that the Fed will raise rates at its June 29-30 meeting. The May CPI report will be released before the stock market opens today.

"No one wants to make a bet one way or another the day before the CPI comes out," said Art Hogan, chief market analyst at Jefferies & Co. in Boston.

"You don't want to be locked into a position in the last hour of trading," Hogan said.

The Dow industrials have lost more than 500 points, or 4.6 percent, since May 13, the day before the last CPI report.

On the New York Stock Exchange, 696.6 million shares changed hands in composite trading, down 10.8 percent from the six-month average of 776.6 million.

Coca-Cola Co. fell $1.06 to $63.75. The world's largest beverage company's drinks were pulled from shelves in Luxembourg and parts of France and the Netherlands as a health scare that began in Belgium spread to more of Europe, Coca-Cola's second-biggest market. Coca-Cola admitted problems at two plants involving pesticide on cans and substandard carbonation gas.

CMP Group Inc., owner of Maine's largest electric utility, jumped $5.69 to $25.75 after Energy East Corp., an owner of a New York utility with more than 1 million customers, offered to buy it for $1.2 billion, a 47 percent premium.

Best Buy Co. rose $1.1875 to $53.9375 after reporting first-quarter earnings of 22 cents a share, beating the average estimate by 2 cents.

Friday marks the quarterly expiration of options on common stocks and stock indexes, as well as futures on indexes. Investors and Wall Street brokerages buy or sell stocks and options in the days leading up to the expirations to reverse earlier bets.

This time, puts and calls are more evenly balanced than for the last few expirations, when puts predominated, traders said.

During the last triple witching day, March 19, the Dow slumped 94 points. Options are contracts that give the buyer the right to buy or sell a security at a predetermined price within a specified period of time. Puts are a bet that the market will fall, calls a bet it will gain.

"It's neither bullish nor bearish for stocks," said Diane Garnick, an equity-derivatives strategist at Merrill Lynch & Co.

"It means we'll trade in a very small range between now and Friday." She estimates that trading range would be from 1,275 to 1,325 on the S&P 500.

Pub Date: 6/16/99

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