Dow jumps 160 points on eve of rate day

Computer shares strong as prospects improve for sales in Asia

June 30, 1999|By BLOOMBERG NEWS

NEW YORK -- Blue-chip stocks rallied for a second straight session yesterday, surprising Wall Street with their momentum a day ahead of the Federal Reserve's interest rate announcement.

Microsoft Corp. and Applied Materials Inc. led an advance in computer-related shares yesterday on optimism that sales will pick up as Asian economies recover from slumps.

The Dow Jones industrial average gained for a third day, advancing 160.20, or 1.5 percent, to 10,815.35. The Standard & Poor's 500 index rose 20.10, or 1.5 percent, to 1,351.45, and the Nasdaq composite index climbed 39.67, or 1.5 percent, to 2,642.11.

Elsewhere on the broad market, the Russell 2,000 index small-cap stocks jumped 5.47 to 454.08; the Wilshire 5,000 index catapulted 5.47 to 12,377.95; the American Stock Exchange composite index advanced 3.38 to 777.48; the New York Stock Exchange composite index climbed 9.10 to 637.99; and the S&P 400 midcap index added 6.70 to 415.22.

The Sun-Bloomberg Maryland index gained 1.43 to 194.04.

"There was no overwhelming moonshot," said Larry Wachtel, market analyst for Prudential Securities. "But some buyers are back, ready to be adventurous."

"Asia is no longer the danger zone it was a year ago," said Howard Kornblue, a money manager for Pilgrim Capital Corp. "Industry sectors like computers and semiconductors are reflecting higher sales expectations for Asia."

An improvement in the bond market, where the yield on the Treasury's 30-year bond fell to 6.06 percent from Monday's 6.09 percent, also lent support to stock prices yesterday.

Advancing stocks outdistanced decliners by a 3-2 margin on the New York Stock Exchange, where 820.1 million shares traded.

Applied Materials, the world's largest semiconductor equipment maker, said sales in Southeast Asia are expected to double as the region recovers from its economic turmoil. Its shares rose $2.75 to $69.125. Microsoft gained $1.25 to $88, and Intel Corp. gained $2.25 to $59.25.

Seagate Technology Inc. slid $2.375 to $27.25 after the disk-drive maker said fiscal fourth-quarter earnings will be 32 cents to 37 cents a share, below analysts' expectations of 49 cents, and that fourth-quarter revenue from disk drives will be down 6 percent.

CMGI Inc. rose $12.625 to $110.3125. The Internet venture fund will pay $2.3 billion to buy a majority stake in Compaq's AltaVista Web search site as a hub that would draw users to its other sites. Compaq gained $1.0625 to $23.375.

Sequent Computer Systems Inc. climbed $3.5625 to $17.5625 on a report that International Business Machines Corp. is negotiating to buy the smaller computer company. IBM gained $2.0625 to $124.625.

Cisco Systems Inc., the No. 1 maker of Internet equipment, advanced 56.25 cents to $62.50 after it agreed to acquire closely held StratumOne Communications Inc. for $435 million in stock to gain technology used in high-speed networks.

United Technologies Inc., the world's biggest elevator maker, added $3.75 to $68.9375. The company got about 17 percent of its sales from Asia in 1998, down from 19 percent in 1997, and stands to benefit from any economic recovery in the region.

Drug shares rose on expectations that lawmakers will block President Clinton's plan to restructure the government's Medicare health-insurance program.

Pfizer Inc. gained $3.8125 to $104.875; Merck & Co. added $1.4375 to $71.50; Eli Lilly rose $2.6875 to $68; and Schering-Plough Corp. climbed $1 to $49.6875.

Chevron Corp. rose $4.1875 to $93.6875 after Donaldson, Lufkin & Jenrette analyst John Hervey raised the stock to "buy" from "market perform." Hervey said he expects the company to deliver one of the best growth records in the sector over the next several years.

Philip Morris Cos. fell 87.5 cents to $40.125. The world's largest tobacco company said it expects earnings of $3.30 per share this year amid a projected decline in unit sales at its international cigarette business. Analysts expected earnings of $3.32 a share.

PepsiCo. Inc. gained $1.1875 to $38 after being raised to "strong buy" from "outperform" by analyst Andrew J. Conway at Morgan Stanley Dean Witter. The company should report consistent earnings-per-share growth, with its Frito-Lay North America unit being a key contributor to earnings in the next several years, Conway said.

Pub Date: 6/30/99

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