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Market, AT&T; share an upbeat day Dow rises 25.6 points for first gain in 4 days


NEW YORK -- U.S. stocks rose yesterday after AT&T; Corp. said it would split into three companies, making each of the parts potentially more valuable. Coca-Cola Co.'s shares gained on expectations for strong third-quarter earnings.

Shares of AT&T; climbed 10.6 percent after the company announced the split and plans to restructure its computer unit, a money-losing division which has kept AT&T;'s stock from outperforming the market for three years. Analysts said the move may spur other companies to find ways to boost their own stocks.

The Dow Jones industrial average rose 25.65, to 4,792.69, gaining for the first time in four days. AT&T;'s stock rallied $6.125, to $63.75, boosting the average by 18 points.

For the second straight day, one stock skewed the average's performance. Caterpillar Inc.'s stock yesterday opened $7.50 lower on concern about earnings, contributing to the average's tumble.

The broader Standard & Poor's 500 index rose 2.57, to a record 586.77. AT&T;'s stock -- the second biggest in the index after General Electric Co., based on market capitalization -- boosted the index by 1.3 points. During the last three years, the telecommunication company's stock has risen 31 percent, lagging the S&P; 500's 38 percent gain.

Steady earnings expected

Other big gainers yesterday were Philip Morris Cos., which added 75 cents, to $80.625, and Caterpillar, which rebounded from Tuesday's $6.50 drop and climbed $1, to $59.875.

Shares of Coca-Cola rallied $1.625, to a record $69.125. The beverage company said it expects shipments of its drinks to rise by 7 percent in the third quarter, ahead of some analysts' expectations. So far this year, the stock is up 34 percent, partly because investors expect the company to post steady earnings no matter how the economy performs.

About 11 stocks rose for every 10 that fell on the New York Stock Exchange, where more than 400 million shares changed hands, led by AT&T;'s 27.9 million shares. Restructuring didn't help all stocks as much as it did AT&T; yesterday. One of the biggest laggards on the day was Colgate-Palmolive Co., which tumbled $4.625, to $67.125, after the company said it will restructure its worldwide operations.

Concerns about cutthroat competition hurt Colgate's rivals, with Procter & Gamble Co. dropping 25 cents, to $75.25; Clorox Co. shedding 25 cents, to $71.875; and Sunbeam Corp. falling 62.5 cents, to $14.625.

Amex index rises 3.88

The Nasdaq composite index, filled with technology stocks, rose 4.77, to 1,065.09, after rallying 10.13 points to 1,060.31 Tuesday. Shares of DSC Communications Corp. rose $2, to $62.875, Applied Materials Inc. surged $1.125, to $104.625, and Tellabs Inc. surged $2, to $50.

Among broad market indexes, the Russell 2000 index of small capitalization stocks rose 0.94, to 314.81; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq stock markets, rose 24.14, to 5,843.27; the Amex market value index gained 3.88, to 551.00; and the S&P; 400 midcap index rose 0.61, to a record 218.45.

Yesterday's most active stocks in U.S. composite trading after AT&T; were SHL Systemhouse, Read-Rite Corp., MCI Communications, Intel and Colgate.

Shares of computer, software and semiconductor companies rose after Seagate Technology Inc. said it was in talks to buy Conner Peripherals Inc. in a stock swap valued at about $1.1 billion and MCI Communications Corp. said it had reached an agreement to acquire SHL Systemhouse Inc. for $1 billion, or $13 a share.

After the close of trading yesterday, 3Com Corp. said its fiscal first-quarter earnings almost doubled, beating Wall Street expectations, on strong sales of its computer network equipment. The stock rallied $2.375, to $48.125, extending its gain for the year to 86.6 percent.

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