Technology, oil rallies offset phone, retailing slump

NEW YORK — NEW YORK -- U.S. stocks closed mixed yesterday as a rally in Microsoft Corp. and confidence that inflation is subdued helped offset slumps in telephone and retailing shares.

The Nasdaq composite index did the best of the three major indexes, rising 5.19, to 868.25, its fourth record in a row.


Microsoft led the way, soaring $3.56, to $84.875, on optimism about the software maker's alliance with General Electric Co.'s NBC television network.

The Dow Jones industrial average dipped 2.42, to 4,435.05, breaking a string of six consecutive record highs. The Standard & Poor's 500 index gained 0.45, to 528.19, its fifth-straight record.


"The market is acting extremely well, even with the disasters in telecom and retailers," said Jonathan McCann, senior vice president in equity trading at Donaldson, Lufkin & Jenrette Securities Corp. On the New York Stock Exchange, for instance, 14 stocks advanced for every nine that declined.

Trading was active as Friday's options expiration approached, with about 366 million shares changing hands on the Big Board, up from a three-month average of 337 million.

The S&P; MidCap 400 index added 0.76, to a record 190.68; the Wilshire 5,000 index rose 10.14, to 5,171.54; the American Stock Exchange market value index rose 1.07, to a record 489.38. The Russell 2,000 index climbed 1.24, to a record 272.17.

Phone shares tumbled after Pacific Telesis Group Inc. warned of stiffer competition and weaker profits this year and AT&T; Corp. disclosed talks with Time Warner Inc. to offer local and long-distance phone service over cable television lines.

Pacific Telesis stock slid $2.625, to $27; the phone company said earnings will fall about 10 percent in 1995 because of lower rates and a decline in its share of the $1.4 billion California local-toll call market, which was opened to competition in January.

Other regional Bell companies also fell amid the prospect of long-distance carriers and cable television companies moving into their long-monopolized businesses.

Ameritech fell $1.25, to $44.625; GTE Corp. dropped $1.50, to $32.75; U S West Inc. eased $1.25, to $40.50; Bell Atlantic Corp. shed $2.125, to $54.875; and SBC Communications Inc. went down $1.125, to $44.75. BellSouth Corp. fell 50 cents, to $62, and Nynex Corp. closed down 87.5 cents, at $41.125.

Retail stocks were another weak spot. They fell on lower-than-expected earnings from Home Depot Inc., Wal-Mart Stores Inc., Dayton-Hudson Corp. and J. C. Penney Co.


Home Depot stock, the most actively traded U.S. company, fell $2.25, to $41.25, on trading of more than 9.7 million shares. The retailer of home-improvement products posted first-quarter earnings of 34 cents a share, below the average analyst estimate of 37 cents.

Wal-Mart fell 50 cents, to $25.125; Dayton-Hudson fell $1, to $69; J. C. Penney declined $1, to $45.50; and Kmart Corp. slipped 12.5 cents, to $13.25.

Technology shares were a mixed bag. Microsoft gained on its plan to team up with NBC to develop products for new media such as CD-ROMs.

America Online Inc. tumbled $3.125, to $38.625, though, after NBC suggested it now will scale back its involvement with other online services.

Chipmakers got a boost from Hewlett-Packard Co.'s statement that supplies of computer parts such as microprocessors and disk drives couldn't keep up with demand, traders said.

Intel Corp. rose 50 cents, to $108.875; Applied Materials Inc. rose $2.25, to $68.75; and Xilinx Inc. rose $2.375, to $90.375. Quantum Corp. rose 75 cents, to $21.25. Parametric Technology Corp. jumped $3.125, to $47.75, and Computer Associates International Inc. leapt $2.875, to $73.


Hewlett-Packard itself fell $1.50, to $69.50, as the computer and medical instruments maker's fiscal second-quarter earnings fell below some analysts' expectations.

The market also was aided by oil stocks, which followed crude prices higher. Exxon Corp. rose 75 cents, to $71.25, and Chevron Corp. added 50 cents, to $49.125.

The yield on the Treasury's benchmark 30-year bond fell to 6.86 percent, down eight basis points from late Monday. Lower bond yields translate into lower financing costs and possibly higher corporate profits, thereby helping stock prices.