FINANCIAL MARKETS : Dow Rises 60 Points as Tech Shares Rebound
Blue-chip stocks posted big gains for a second consecutive session Friday, propelled by a rebound in technology shares and a burst of activity linked to the expiration of options.
The Dow Jones industrial average ended 60.33 points higher at 5,184.68, after having gained nearly 70 points earlier in the session. On Thursday, it closed 57.45 points higher.
In the broader market, advancing issues led decliners 1,302 to 1,025 on heavy volume of 496 million shares on the New York Stock Exchange.
The Nasdaq composite index rose 11.21 points to 1,018.45.
For a second day, IBM led the charge as a slew of surprisingly strong corporate earnings reports further allayed investor fears about weak corporate results.
IBM rose 6 1/2 to 102 1/2 after reporting better-than-expected fourth-quarter earnings on Thursday. The stock soared 8 7/8 that day.
“I’m surprised at how good earnings are in general,” said Charlie Crane, director of research at Spears Benzak Salomon & Farrell. “By and large, we’re seeing a preponderance of earnings revised downward after company guidance on 1996 earnings. We may be seeing the last dose of surprisingly good earnings now.”
Friday was highlighted by strong results from Chrysler and reaction to Microsoft’s better-than-expected earnings.
Late Thursday, Microsoft said its profit jumped 54% to $575 million, or 90 cents a share, for its fiscal second quarter ended Dec. 31. That soundly beat Wall Street estimates. The stock climbed 4 1/4 to close at 91 7/8 on Friday.
Chrysler rose 1 7/8 to 54 1/8 after reporting a $1.04-billion profit for the fourth quarter, exceeding even Wall Street’s most optimistic forecasts.
In economic news, the Labor Department reported that nonfarm payrolls added 151,000 people in December and that the unemployment rate was steady at 5.6%.
The jobs data was slightly stronger than Wall Street had expected, and left traders debating whether the central bank might cut interest rates at its policy-setting Federal Open Market Committee meeting Jan. 30 and 31.
David Shulman, chief equity strategist at Salomon Bros., said his firm believes that the Federal Reserve Board will cut the federal funds rate (what banks charge each other for short-term loans) by a quarter of a percentage point and the discount rate (what the Fed charges banks for loans) by half a point.
Among market highlights:
* Micron Technology lost 2 1/4 to 31 after Chief Executive Steven Appleton resigned Thursday.
* General Electric added 1 3/4 to 74 1/4 after having gained 1 1/8 on Thursday on news of strong earnings for its previous quarter.
* Cephalon tumbled 12 1/2 to 23 3/8 after the Food and Drug Administration raised concerns about data the company had submitted for its medication to treat amyotrophic lateral sclerosis, or Lou Gehrig’s disease. Chiron, Cephalon’s partner for the drug, Myotrophin, shed 5 1/2 to 104.
Grain prices surged Friday on fresh signs of vibrant export demand and on a forecast that farmers will plant fewer acres of corn than previously anticipated.
Global supplies of corn and wheat are at 20-year lows, and a government report showing another strong week of export demand for U.S. grains helped drive up prices.
Bitterly cold weather across the Midwest also contributed to the situation, because the winds could damage dormant wheat plants and because livestock must be fed more grain to keep warm.
“There is support from the weather and the good export number,” said Ron Kucha of O’Connor & Co.
The U.S. Department of Agriculture said U.S. wheat export sales for the week of Jan. 5 were at a year-high 1.5 million metric tons, and corn sales were at 1.8 million metric tons, a 23% increase over the previous week. Soybean sales were also up sharply.
“Corn is the driving force. It’s still a demand-led game in here,” said Steve Bruce of E.D. & F. Man International.
