Stocks Climb, Recovering Month’s Losses
The Dow Jones industrial average rose 100 points for a second straight session Wednesday, wiping out the remnants of a worrisome New Year’s slide as the tensions over Asia and the White House crisis eased.
The Dow rose 100.39 points to 7,915.47, its best close since Jan. 5, and now is up 7.22 points since the start of 1998.
The Standard & Poor’s 500 also pushed back into positive territory for 1998 and the technology-heavy Nasdaq composite index shot above 1,600 for the first time since Dec. 10.
With just two sessions to go in January, the Dow and S&P; 500 have suddenly mounted a full recovery from losses that once exceeded 4% in a month that frequently foretells the market’s fortunes for an entire year.
Before Tuesday, the market had been mired in a four-session slump, weighed down by all the uncertainty about how much the Asian economic crisis will hurt the U.S. economy and whether the Monica Lewinsky controversy will seriously impair President Clinton’s leadership at home and abroad.
The jitters have ebbed somewhat this week, however, thanks to signs of progress in Asia and a more assertive stance by the White House in recent days, capped by Tuesday night’s generally well-received State of the Union address by Clinton.
With the slight improvement in sentiment, the market has apparently begun to pay more attention to what has been a mostly encouraging stream of company reports on fourth-quarter profits.
Bond yields ended barely changed in quiet trading Wednesday as dealers anxiously waited to see if Federal Reserve Chairman Alan Greenspan would hint at the direction of interest rates in an appearance Thursday on Capitol Hill. The yield of the benchmark 30-year Treasury bond hovered around Tuesday’s late rate of 5.94%.
UAL Corp., parent of United Airlines, and aerospace and auto equipment maker AlliedSignal Inc. were among the companies to exceed fourth-quarter earnings estimates Wednesday.
Computer-related shares rallied as many investors reconsidered whether a recent tumble in the stocks was justified. Oracle rose $2.19 to $21.19 after Chairman Lawrence Ellison said he expects North American sales to grow 25% in the fiscal third quarter. The database software maker fell 29% on Dec. 9 after reporting disappointing earnings.
“These types of stocks have been beaten up badly and are now at pretty attractive valuations, even in light of everything going on in Asia,” said Jim Oberweis Jr., a money manager at Oberweis Asset Management, which oversees $250 million. Anadigics Inc., a maker of integrated circuits, is down 39% from its high in August; on Wednesday, it rose $2.06 to $32.63.
Among Wednesday’s highlights:
* Tech stocks posting gains included Tellabs, up $5.13 to $50.94; Texas Instruments, up $3.81 to $55.94; Microsoft, higher $3.81 to $149; and Motorola, which added $3 to $59.88. National Semiconductor rose $1.25 to $27.13 after the company’s chief investment officer said he expects revenue to increase in the “high teens” in fiscal 1998.
But Viasoft fell $2.09 to $34 after the maker of software to fix the year-2000 computer problem said second-quarter sales were lower than some analysts expected.
* UAL rose $1.69 to $88.25 after the airline said fourth-quarter profit rose 63% from the year-earlier period, topping analyst estimates. AMR rose $3.06 to $126.75, Delta jumped $4.25 to $114.38 and Southwest rose $2 to $27.63.
* AlliedSignal rose $2.50 to $39.31 after it said fourth-quarter profit rose 15% because of acquisitions, cost-cutting measures and improved sales.
* Procter & Gamble, Gillette and Corning declined amid concern that earnings in Asia will be hurt in coming months. P&G; fell $1.63 to $79.25, while Gillette dropped $2.25 to $100, and Corning lost $3.56 to $32.31.
“P&G; acknowledged that profits from Asia in the fiscal third quarter will fall 25% to 50% below last year’s pace,” said Tony Vento, an analyst at Edward Jones in St. Louis. He said about 10% of Procter & Gamble’s profit is derived from Asia and that the company told analysts to trim fiscal 1998 profit estimates by 2 cents a share.
* Sunbeam dropped $3.56 to $38 after the company’s fourth-quarter profit fell below estimates, reflecting lower-than-expected profit margins even as revenue surged with the introduction of new appliances.
* Egghead slumped $1.38 to $6.38 after the software retailer said it will close all its stores, slash 80% of its workers and become an Internet-only shop.
* Polaroid fell 38 cents to $41.63 after reporting its fourth-quarter earnings fell 6.5%.
* DuPont rose $1.88 to $57.88 after the largest U.S. chemical company said its fourth-quarter earnings rose 10% matching expectations, as increased shipments offset lower prices resulting from a strong U.S. dollar.
Overseas, London’s FTSE-100 finished up 0.87% to close at an all-time high, powered by a buying frenzy in financial stocks and as investors continued to regard British stocks as a safe haven among global markets.
Tokyo’s 225-share Nikkei average closed down 0.05%, as most Asian markets, including Hong Kong, Taiwan, South Korea and Singapore, were closed for Chinese New Year holidays.
The dollar rose against the German mark and fell against the Japanese yen as traders dumped the mark and bought yen through most of the trading day. In New York trading late Wednesday, the dollar was quoted at 124.75 yen, down from 125.32 Tuesday. The U.S. currency also settled at 1.81 German marks, up from 1.79.
