Stocks mixed late rally boosts Dow

NEW YORK — NEW YORK -- U.S. stocks were mixed yesterday as concern about earnings buffeted another big computer maker, Hewlett-Packard Co., and a report on housing starts prompted questions about the strength of the economic recovery.

Computer-driven buy orders fueled a late rally that pushed the Dow Jones industrial average higher. The Dow industrials closed at a session high of 3,511.65, up 19.65. The computer-driven trading was tied to Friday's "triple-witching hour," when options and futures on stock indexes expire, traders said.


"The options expiration made for volatile trading this afternoon," said Edward Collins, executive vice president of institutional trading at Daiwa Securities America.

Standard & Poor's 500-Stock Index gained 1.16, to 447.43, while the Nasdaq Combined Composite Index dropped 1.09, to 696.25. The American Stock Exchange Market Value Index rose 0.20, to 435.67.


Advancing common stocks narrowly led decliners on the New York Stock Exchange. Computer-related stocks were the day's worst performers.

Hewlett-Packard tumbled as low as $79.50, down $7.50, and closed down $3.375 at $83.625. Company officials told analysts in Frankfurt, Germany, that order rates in the first half of its fiscal year may not be sustainable in the second half, which ends in October.

The forecast from Hewlett-Packard followed similar profit warningsover the past few days from Apple Computer Inc. and Minnesota Mining & Manufacturing Co.

"It's hard to believe an economic recovery is under way given the release of bad earnings news from leading companies like Apple Computer and Hewlett-Packard," said John Brooks, director of sales and marketing at Notley Group.

The slump in Hewlett-Packard's stock prompted a decline in shares of other computer companies. Digital Equipment Corp. fell 50 cents, to $42.375, and Microsoft Corp. dropped $1.25, to $91.25.

Adobe Systems Inc., which makes software used in Hewlett-Packard laser printers, fell $3, to $69. "Hewlett-Packard has really affected quite a few stocks deeply, and Adobe's a perfect example," said Peter DaPuzzo, senior managing director Cantor Fitzgerald & Co.

Concern about the economy surfaced after the Commerce Department said yesterday that housing starts increased 2.4 percent in May after soaring 8.1 percent in April amid the lowest mortgage rates in 20 years.

Although May's increase marked the second consecutive monthly rise, it fell short of the 3.1 percent rise analysts predicted.


"The housing-starts number gets people thinking away from cyclicals and toward growth stocks a little bit more than they have been," said Edward Laux, head trader at Kidder,Peabody & Co.

Trading on the New York Stock Exchange was active, with about 268 million shares changing hands.

American Telephone & Telegraph Co. plunged $1.125, to $62.125 as the stock retreated from Tuesday's 52-week high of $63.875.

Defying the trend in the computer group, Micron Technology Inc., a semiconductor maker, rose $1, to $35.75, after the company said its fiscal third-quarter earnings rose to 73 cents a share from 4 cents a year ago.

LTV Corp., Costco Wholesale Corp., Wal-Mart Stores Inc., Price Co. and 3Com Corp. were the most actively traded issues on the U.S. Composite.

Price Co. surged $6.25, to $38.50, after Costco agreed to merge with its rival warehouse retail chain for $2 billion in stock. The merger would create the nation's largest warehouse club retailer. Costco gained $2 to $19.


USAir Group Inc. slid $1.75, to $17.125. The airline said it expects to report losses for the second quarter and all of 1993. Analysts were forecasting that USAir would earn 13 cents a share in this year's second quarter and show a loss of $1.80 a share for the full year. USAir lost $3.07 a share in last year's second quarter.

General Electric Co. gained $1.125, to $95.25. The company said its NBC broadcasting unit will report cash flow of about $300 million and pretax income of $350 million this year, exceeding some analysts' estimates.