Stock Market Bounces Back

A relieved Wall Street rallied Friday after independent counsel Kenneth Starr's report failed to spring any surprises in its account of the White House sex and perjury scandal.

"It's the old sell on the rumor and buy on the news," said Hugh Johnson, chief investment officer at First Albany.

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On the week, the Dow added 155.25 points, or 2.0 percent. It was only the second winning week in the last eight weeks. On the year, the Dow is off 112.75 points, or 1.4 percent, following gains of 33 percent, 26 percent, and 22 percent, in 1995, 1996, and 1997, respectively.

Earlier Friday, the House of Representatives overwhelmingly voted to release Starr's 445-page report on the president's relationship with Monica Lewinsky. The report cites 11 grounds for impeachment and said Clinton "pursued a strategy of deceiving the American people and Congress" for seven months.

In televised comments prior to the report's release, the president apologized for his actions and said he intends to mount a vigorous defense of Starr's allegations.

"The Clinton apology this morning puts a little more positive spin for the near-term at least," said Barry Hyman, senior market analyst at Ehrenkrantz King Nussbaum. "I think the market will hold the Dow (at the) 7,400-to-7,500 level and I feel it fairly well discounts a slow growth economy.

"Intel's announcement today [of above-forecast sales] certainly was an important story and you can't discount this since Intel is a market leader," Hyman said. "In the end run, the U.S. stock market will boil down to Japan, and what happens to its banking system."

"What I'm picking up is that everyone is exhausted after this week," said Hugh Johnson, chief investment strategist at First Albany Corp. "Everyone knows what's in Starr's report.

"There are so many piece that have been thrown at us this week, like the decline in Brazil's stock market and the reduction in short-term rates in Japan," Johnson continued. "I think there's a real desire to have a couple of days to put all the pieces out on the table and try to figure out what they add up to. So, everyone's anxious to get to the weekend as fast as possible."

Meanwhile, Lehman Brothers (LEH) scuttled widespread speculation that it absorbed hefty losses on its Latin American investments. Last week, the investment bank said its exposure to emerging markets would gouge third-quarter earnings to the tune of $60 million. It expects to earn about $151 million in the quarter vs. the $197 million in the same period of 1997. Its stock stepped back 3 9/16 to 35 1/16.

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• Japan's Economic Planning Agency said gross domestic product declined 0.8 percent in the second quarter vs. the prior quarter. It marked the first time since 1955 that Japan's economy shrank for three consecutive quarters.
• Tokyo's Nikkei 225 index fell 5.1 percent to 13,916.98, its biggest slide this year. It stood just inches above its 12-year closing low of 13,915.63 set Aug. 28. The yield on Japan's 10-year government bond fell to 0.780 percent, a record low.
• Other Asian markets sank, with Hong Kong's Hang Seng Index down 3.5 percent and Malaysia's KLSE Composite off 3.1 percent.
• European markets also fell. London's FTSE 100 index gave back 1.0 percent, Frankfurt's DAX index 0.2 percent, and Paris' CAC 40 index 0.5 percent.
• Latin American markets rebounded from Thursday's selloff. Brazil's Bovespa index of 58 stocks bounced back 5.3 percent after shedding about 15 percent Thursday. Also, Mexico's IPC index dipped 2.6 percent and Venezuela's IBC index declined 0.9 percent.
• Russia's State Duma, the lower house of parliament, voted 317 to 63 to confirm Yevgeny Primakov as prime minister. The action comes after the Duma twice rejected Viktor Chernomyrdin, President Boris Yeltsin's first choice for the job.

• The Standard & Poor's 500 Index rose 2.9 percent.
• New York Stock Exchange winners bested losers by 1,956 to 1,103. New 52-week highs totaled 24, while there were 392 new 52-week lows.
• On the Big Board floor, turnover eased 7 percent to 822 million shares.
• The Nasdaq Composite advanced 3.6 percent. Advancing issues led decliners by 13 to 7 in the Nasdaq Stock Market, with 10 new highs and 314 new lows. Volume totaled 698 million shares.
• The Russell 2000 Index of small-company stocks advanced .5 percent.
• The 30-year Treasury declined 18/32, to yield 5.224 percent.

• Oracle (ORCL) added 3 3/8 to 25 1/2. After trading closed Thursday, the company said it earned 20 cents a share in the fiscal first quarter, 4 cents above most analysts' estimates.
• Intel (INTC) picked up 5 7/8 to 84 15/16. After the close of Thursday's activity, the semiconductor titan said third-quarter revenues will probably come in above expectations, and between 8 percent and 10 percent better than the level for the second quarter.
• Lehman Brothers (LEH) scuttled widespread speculation that it absorbed hefty losses on its Latin American investments. Last week, the investment bank said its exposure to emerging markets would depress third-quarter earnings by $60 million. It expects to earn about $151 million in the quarter vs. the $197 million in the same period of 1997. Its stock stepped back 2 13/16 to 35 13/16.
• Northwest Airlines (NWAC) tacked on 2 1/8 to 27 7/8. The carrier struck a tentative agreement with the pilots' union to end its 13-day-long strike. Northwest expects to realize a third-quarter loss due in part to the strike and slowing domestic demand in July. It also said it sees losses for the fourth quarter and the 1998 year. Wall Street had projected third-quarter net of $1.83 a share, fourth-quarter profits of 85 cents, and 1998 earnings of $4.19.
• General Electric (GE) advanced 2 3/16 to 79 1/4. The company said third-quarter results should meet analysts' expectations of 69 cents a share, with revenues growing by 15 percent to 20 percent.
• American Express (AXP) appreciated 9 3/4 to 79 1/4. The financial services company said it it targeting earnings growth of 12 percent to 15 percent and revenue growth of 8 percent going forward. It is also aiming for 18 percent-to-20 percent return on equity.
• Dell Computer (DELL) gained 2 11/16 to 57 7/16. Thursday, chief executive Michael Dell spoke strongly of the company's progress in the current quarter.
• Schein Pharmaceuticals (SHP) plunged, losing 12 1/16 to 11 11/16. The U.S. Food and Drug Administration filed a seizure action encompassing every product made by Schein's Steris Laboratories unit, effectively halting the manufacture and distribution of Steris' products.