Stocks stabilize, make small gains

NEW YORK — NEW YORK -- U.S. stocks recouped a fraction of the previous two days' decline yesterday as software and makers of personal computers recovered.

Stronger-than-expected earnings from Compaq Computer Corp., Exxon Corp., General Motors Corp., Bausch & Lomb Inc. and Bank of Boston helped stabilize the market.


"Earnings are coming out ahead of expectations on balance still," said Gail Dudack, market strategist at UBS Securities. "That has to be pretty amazing, given how weak the economy was in the second quarter."

The Dow Jones industrial average rose 12.68, to 4,641.55, one day after sliding 57.41, its biggest loss in two months, as concern spread that earnings growth may slow at technology companies such as Intel Corp. and Microsoft Corp., the market's leaders this year.


International Business Machines Corp., GM and Union Carbide Corp. posted the biggest gains.

An improvement in Microsoft helped the Nasdaq composite index rebound 7.74, to 960.57, after plunging 35.66 Wednesday, its worst drop in points since the 1987 stock-market crash. Higher prices for Price/Costco Inc., Apple Computer Inc., Cirrus Logic Inc. and Nordstrom Inc. also lifted the Nasdaq.

The Standard & Poor's 500 index added 2.56, to 553.54, recouping part of Wednesday's 7.48-point decline, as telephone, electrical equipment, railroad and regional banks issues climbed.

More than seven stocks rose for every four that fell on the New York Stock Exchange, where volume dropped to 386.4 million shares from 482.9 million Wednesday.

The Wilshire 5000 index climbed 28.23, to 5438.81, while the Russell 2000 index of small-company shares grew 2.35, to 289.42.

Stocks steadied amid yesterday's earnings announcements. "Compaq's earnings are a strong upside surprise, which could help save the tech stocks," said Jonathan McCann, senior vice president in equity trading at Donaldson, Lufkin & Jenrette Securities Corp.

Compaq, up $3.50 to $48.50, reported second-quarter net income climbed to 90 cents a share from 78 cents last year, beating analysts' estimate of 86 cents.

Other makers of personal computers climbed in reaction. IBM added $2.875, to $104.125; Digital Equipment Corp. gained 62.5 cents, to $36.75; and Apple Computer rose $1.5625, to $46.0625.


Microsoft rebounded, and for most of the day, so did Intel. Microsoft rose $1.625, to $96.125, after sliding $7.375 Wednesday and a total of 13.3 percent in two days.

Intel fell 75 cents, to $64.5, after briefly rising as much as $1.75. While the country's largest semiconductor maker has fallen 15.6 percent in three days, it has still climbed 128 percent in the past year.

Mutual fund companies said retail investors flooded phone lines Wednesday, but withdrew little money from stock funds.

Fidelity Investments, the nation's biggest fund company, said phone calls to sales representatives were 14 percent higher Wednesday than Tuesday: "We received lots of phone calls but hardly any redemptions."

GM jumped $1, to $49.625. The country's largest carmaker said second-quarter net income rose $2.39 a share from $2.23 last year.

Rail stocks rallied after Union Pacific Corp. reported better-than-expected second-quarter earnings and the Justice Department approved Burlington Northern Inc.'s merger with Santa Fe Pacific Corp.


Union Pacific gained $1.75, to $60, Burlington Northern added $2.625, to $68, and Santa Fe climbed $1.625, to $27.875.