The Dow Jones Industrial Average advanced 13.91 points, or 0.2 percent, to 8,533.14. For most of the day, the index edged lower and was down as much as 97.06 points on selling in Chevron and Minnesota Mining & Manufacturing shares. A rally in the final two hours of action nudged the Dow into positive territory.Thursday's release of another mountain of corporate earnings reports turned up few negative surprises. Many companies had steered analysts to slice their profits estimates over the past several weeks so as to avoid a market shock upon the actual release of the results.
The retail sector performed best, a plus given its reputation as a weather vane for the outlook for consumer spending. Technology stocks also helped set Thursday's pace, particularly Internet-related plays. According to Ryan Jacob, portfolio manager at The Internet Fund, Web stocks responded to blowout earnings reports from MindSpring Enterprises and GeoCities.
Consumer noncyclical shares, favored for their bright earnings visibility, also came alive. Elsewhere, the financial sector plodded forward, with most major banks logging point-plus wins.
Thursday's early weakness in blue-chip stocks followed by their afternoon rebound is typical of the action associated with a bull market.
Solid investor demand for shares of the biggest U.S. initial public offering ever, that of Conoco, was another market positive.
"Stocks are acting like a market that has just finished a bear market and restarting a bull market," said Hugh Johnson, chief investment strategist at First Albany Corp.
"You see the more economically-sensitive sectors, like the airlines, automobiles, aluminums, and technology companies, doing a little better," he observed. "The message is very clear: Collectively, investors believe that sometime down the road, the economy's going to do a little better than exected."
Johnson holds out the possibility that the U.S. economy will slow down in the fourth quarter of 1998 and the first and second quarters of 1999. But he notes the market's tendency to look beyond just the next quarter or two.
"The stock market is looking over the valley, looking further out, and the collective wisdom of investors is that we're going to have a slowdown in the economy, but not a recession, and earnings will start to improve again."
In Thursday's market indicators:
- The Standard & Poor's 500 Index rose 0.8 percent.
- New York Stock Exchange winners outpaced losers by 3 to 2. New 52-week highs totaled 29, with 40 stocks hitting new 52-week lows.
- On the Big Board floor, turnover rose 1 percent to 747 million shares.
- The Nasdaq Composite advanced 1.7 percent. Advancing issues led decliners by about 3 to 2 in the Nasdaq Stock Market, with 20 new highs and 85 new lows. Volume totaled 884 million shares.
- The Russell 2000 Index of small-capitalization stocks gained 1.8 percent.
- In the bond market, the 30-year Treasury fell 30/32, to yield 5.135 percent.
Among the stocks in the news:
- Conoco (COC), the new kid on the block, rose 1 7/8 to 24 7/16. The oil company, previously a DuPont subsidiary, sold 191.46 million shares at a price of $23 apiece in its initial public offering. It was the biggest IPO ever on Wall Street for a U.S. company.
- Minnesota Mining & Manufacturing (MMM) declined 2 13/16 to 81 7/16. Third-quarter operating profits totaled 97 cents a share, a penny below most Wall Street estimates and 6 cents less than the year-ago figure. However, the diversified manufacturer sees fourth-quarter results beating those of the same period of 1997.
- Bankers Trust (BT) gained 1 1/4 to 61 3/8. The money center bank reported a third-quarter loss of $4.98 a share, much worse than Wall Street's projection of a deficit of $3.70. In the third quarter of 1997, profits came to $2.19. Substantial trading losses in emerging markets were the primary contributor to the abysmal showing.
- Xerox (XRX) eased 1/4 to 93 5/16. The document processing products specialist edged past Street forecasts by a penny with its third-quarter results of $1.05 a share. That was 16 cents better than that of the same quarter of 1997. But revenue growth disappointed some on Wall Street. Xerox said its goal is to crank out earnings growth in the 15 percent-to-19 percent range over the next several years.
- Procter & Gamble (PG) earned 80 cents a share in its fiscal first quarter, besting the consensus estimate of 77 cents and the year-ago tally of 73 cents. Revenues grew 2 percent. The consumer products giant said sales and earnings growth should accelerate in the fiscal second quarter ending December 31. The shares picked up 3 3/16 to 87.
- Sears (S) sidled past most views by a penny when it reported operating profits of 76 cents a share in ththird quarter. It earned a like amount in the same period of 1997. For all of 1998, Sears expects to record mid-single digit earnings growth. The stock rallied 1 5/8 to 43 7/8.
- Lucent Technologies (LU) dipped 5/8 to 78 3/8. It netted 41 cents a share on an operating basis in its fiscal fourth quarter, 2 cents richer than most on the Street had envisioned. In the same quarter of 1997, it earned 28 cents. Separately, the telecommunications equipment maker penned a five-year deal to provide a wireless broadband network for WinStar Communications.
- Dow Industrials member Chevron (CHV) lost 5 3/4 to 81 1/2 despite posting earnings of 70 cents a share in the third quarter, 7 cents above most views. But the figure was 37 percent lower than the number of a year ago. The stock was pressured after the company cautioned that near-term results will be negatively affected by sagging oil prices and crimped profit margins.
- GeoCities (GCTY) demolished Street expectations when it checked in with a third-quarter loss of 14 cents a share, far better than the 24-cent-a-share deficit predicted by most analysts. The provider of communities of personal Web sites, which went public in August, said it attracted 44.8 million page views on average each day in September. In June, the figure was 30.5 million. Page views are the most widely-used statistic to gauge the popularity of an Internet site. The stock added 1 7/8 to 24 1/8.
- Elsewhere in the world of the Web, America Online added 6 1/2 to 113 1/2, Amazon.com 4 1/4 to 114 1/4, Yahoo! 2 3/8 to 122 1/8, CMG Information Services 3 5/8 to 52 1/4, CNET 3 1/4 to 39 1/2, DoubleClick 1 11/16 to 24 3/8, Lycos 1 7/16 to 33 3/16, and Excite 1 1/16 to 32 9/16.
- In the consumer noncyclical sector, Johnson & Johnson stepped up 2 5/16 to 83 1/8, Colgate Palmolive 2 71/256 to 86 15/16, Bristol-Myers Squibb 2 13/16 to 108 3/4, Pfizer 2 3/4 to 100 3/4, Warner-Lambert 2 1/16 to 74 7/8.