WALL STREET IBM drop fails to check rally

Press, 14 October 1985, Page 34

WALL STREET IBM drop fails to check rally

NZPA-AP New York New York stock prices rallied on Friday, car issues and International Business Machines shares leading the way. The Dow Jones average of 30 .industrials climbed 11.87 points to close at 1339.94, finishing the week with a net gain of 11.20 points. Advances outpaced declines about two to one on the New York Stock Exchange. As the day began, IBM reported profits of SUS2.4O a share for the third quarter, down from $2.60 in the comparable period last year. The figure, which marked the third consecutive quarterly earnings decline for IBM, was lower than most analysts’ estimates.

Nevertheless, the market took the news in its stride. Brokers said there were mixed feelings about Government reports that showed a 2.7 per cent jump in American retail sales and a 0.6 per cent drop in producer prices of finished goods for September.

The retail sales data were swollen by booming car sales as consumers responded to promotional financing deals. The producer price figure, while favourable for the inflation outlook, was also read by some as a symptom of a still-sluggish economy. The week began with stock prices drifting lower in selling ascribed to worries about the outlook for corporate profits. The Dow Jones average dropped 4.37 points on Tuesday. Investors were given some up-beat news during the week-end by a group of

corporate purchasing executives.

In reporting the results of a monthly survey, the National Association of Purchasing Management said production and new orders registered significant gains in September, “suggesting new strength in the economy.” But analysts said investors still seemed to be worried about forthcoming earnings reports for the third quarter. Brokers said the market was also unsettled by talk that Mr Paul Volcker might be planning to resign as chairman of the U.S. Federal Reserve System, which has strongly denied recurring rumours of the resignation.

On Tuesday, stocks closed mostly lower in quiet trading after showing little movement in the latter half of the session. The Dow Jones edged up 1.12 points. On Wednesday the stock market posted a small gain with the help of food stocks which climbed on speculation that several could be ripe take-over targets. The Dow Jones added 1.23 points.

Beatrice Cos led the actives, up one to 43/2 on more than 5.53 M shares. The stock had been rising on extremely heavy volume since October 4 amid rumours the company was about to receive a leveraged buyout offer. Elsewhere in the food group, Ralston Purina, General Mills, Dart and Kraft, Pillsbury, Borden, Campbell Soup, and Sara Lee all rose. On Thursday, prices were mixed in a drifting, indecisive session. The Dow Jones rose 1.35 points.

As Wednesday’s heated take-over speculation faded, the market had to contend with persistent concerns about the outlook for the American economy, corporate earnings, and interest rates.

Brokers said a barrage of new debt securities from the Treasury was expected soon in the credit markets. Many Wall Streeters were worried that it will push interest rates higher. Closing prices (in U.S. dollars) of a selection of issues were:

Alcan Alu 24%, Alcoa 32%, Amerad Hes 27%, ABC 115%, Am Express 41%, Am Motors 3, ATT 21%, Armco 8%, Asarco 17%, Atl Rich 62/4, Beth Stl 16%, Boeing 43%, Borden 43%, Burroughs 52%, Chrysler 38, Citicorp 43, Coca Cola 70%, Colgate 27, CBS 118%, Conti Grp 16%, Crane 36%, Dar Krft 39%, Digital 106%, Disney 88%, Dome Mines 9, Dow Chem 35%, Du Pont 58%, East Kodak 44%, Englhrd 23%, Exxon 53, Firestone 18%, Fluor 16%, Ford 46%, Frpt McM 19%, Gen Dynam 68, Gen Elec 58%, GM 69%, Gen Tire 46%, Goodyear 27, Greyhound 25%, Grumman 31%, Gulf Oil 15%, Haliburton 25%, Homestake 24%, Honeywell 60%, IBM 125%, Inti Harv 6%, INCO 11%, ITT 34%, Lockheed 44%, Manville 5%, Jhsn Jhsn 44%, Kaiser Alu 15%, K Mart 31%, McDonald’s 65%, McDon Doug 66%, MGM 24%, MMM 76%, Mobil 29%, Monsanto 41%, NCR 31%, Newm Min 44%, Pfizer 45%, Phel Dodge 21%, Phil Pete 12%, Polaroid 35%, RCA 44%, Raytheon 48%, Reyn Metal 34, Royl D Pet 62%, Seagrams 41%, Sears Roe 32%, Shell Rt 39, Sperry 47%, Chevron 38%, Sohio 45%, Texaco 37, Texas Inst 90, Union Carb 55, US. Steel 31%, Westg Ele 38%, Woolworth 49%, Xerox 47%, Merryl Lynch 27%, Occidental 33%, Heinze 57%, Clevel’d Cliff 17%, Inter-north 43, Am Airline 39.