clarinews@clarinet.com (JANICE KIRKEL, UPI Business Writer) (01/19/90)
NEW YORK (UPI) -- Stocks closed mixed Thursday as the blue chips mustered a late technical rebound after Wednesday's sharp drop but the broad market remained under the thumb of gloomy earnings reports. The Dow Jones industrial average, which sank 33.49 Wednesday, rose 7.25 to close at 2666.38 after having been down 25 points before noon. Among broader market gauges, the New York Stock Exchange composite index closed up 0.21 to 187.07 and Standard & Poor's 500-stock index rose 0.79 to 338.19. The price of an average NYSE share gained 4 cents. Declines led advances 879-589 among the 1,970 issues crossing the NYSE tape, but the margin had narrowed from about 3 to 1 in early trading. Big Board volume totaled 178,590,000 shares, compared with 170,470,000 shares traded Wednesday. Analysts said fading hopes for an interest rate cut and disappointing earnings at Digital Equipment continued to pressure prices, despite the slight bounce in the blue chips. Digital early Thursday reported earnings of $1.25 a share for the December quarter, below analysts' expectations. The stock closed with a loss of almost $6 a share. Analysts said the news, coming on the heels of lackluster reports Wednesday from International Business Machines Corp. and Alcoa, sparked selling. ``When anything negative happens, this market uses it as an excuse to go down,'' said Tom Gallagher, managing director in charge of capital commitment at Oppenheimer and Co. ``People say, `If their earnings are bad, why not everybody else's?' Anything could get people to sell stocks in an environment like this,'' he said. In addition, analysts said investors' hopes for lower interest rates received a blow from a report in Thursday's Wall Street Journal saying that two Federal Reserve governors have indicated they probably will not favor cutting rates right now. The market had hoped for such a move to offset weak earnings reports, they said. ``What you got today is a battle between the negative fundamentals of poor earnings and a weak bond market (depressed by the unfavorable rate outlook) and a stock market that is terribly oversold on a technical basis,'' said Newton Zinder, market analyst at Shearson Lehman Hutton Inc. ``This was a technical rally.'' On the trading floor, Harcourt Brace Jovanovich was the most active NYSE issue, off 1/8 to 2 7/8. Citicorp followed, up 1/8 to 26 1/2. Harcourt Brace preferred was third, down 1/4 to 2 3/4. Reports said the company expects 1990 operating profits to be significantly above 1989 levels. Among the blue chips, AT&T lost 1/8 to 42 3/8, Alcoa fell 3/8 to 66 1/2 after tumbling Wednesday on its earnings report, IBM rose 5/8 to 99 1/2, Woolworth lost 1/2 to 61 1/8 and Coca-Cola fell 3/8 to 72 1/8. The technology sector generally headed lower after Digital's report. Digital plunged 5 7/8 to 82, Compaq fell 1 1/4 to 81 3/8, Hewlett-Packard was down 3/8 to 45 3/8 but Tandem Computer, which reported quarterly earnings at the low end of expectations, was up 1/8 to 25 3/8. Elsewhere, USAir sank 2 to 28 3/4 after reports saying it expects a loss for 1989 and Intertan tumbled 2 1/8 to 51 1/2 after reporting sharply lower quarterly earnings. Bank of New England plunged 1 5/8 to 4 1/4 after reports said an agreement to sell some of its operations to Fleet/Norstar had fallen through. Volume of NYSE-listed issues, including trades in stocks on regional exchanges and in the over-the-counter market, totaled 210,008,750 shares, compared with 202,032,740 shares traded in the previous session. Prices closed lower in moderately active trading on the American Stock Exchange. The Amex Market Value index lost 1.89 to close at 366.17. The price of an average share lost 7 cents. Declines led advances 346-216 among the 801 issues traded. Composite volume totaled 15,058,300 shares, compared with 18,554,800 traded Wednesday. Kingdom of Denmark ``put'' warrants on the Nikkei index, which effectively function as bets that the Tokyo stock market will fall, led the Amex issues, off 1/4 to 5 3/8. The National Association of Securities Dealers composite index closed down 1.16 at 437.52.