Strong earnings propel stocks Drug, computer firms benefit; Nasdaq composite hits record

NEW YORK — NEW YORK -- U.S. stocks rose yesterday as a spate of unexpectedly strong earnings sent drug companies' shares higher. Computer companies rebounded from Wednesday's losses, sending the Nasdaq composite index to a record.

Prices got a lift as a Federal Reserve Bank of Philadelphia monthly report bolstered confidence in the strength of the economy. Profit growth ought to stay on track as long as manufacturers see strong demand for their products.


Bolstered by higher prices for Amgen Inc., U.S. Robotics Corp. and Microsoft Corp., the Nasdaq composite jumped 15.43 to 1,136.30, its 12th high of the year and second this week.

The Dow Jones industrial average rose 1.81 to 5,551.74, after slumping 70.09 points Wednesday when International Business Machines Corp. warned that falling prices will make it tougher to keep profits growing.


On the broad market, the Standard & Poor's 500 index, representing 75 percent of the market capitalization of all U.S. stocks, rose 2.00 to 643.61; the Wilshire 5,000 index rose 27.04 to 6,372.74; the Russell 2,000 index climbed 1.57 to 337.46; and the American Stock Exchange market value index jumped 2.70 to 583.08.

bTC Microsoft surged $3.0625 to $109. After the market closed, the world's largest software publisher said fiscal third-quarter profits rose to 88 cents a share from 63 cents in the year-ago period. Analysts had forecast it would earn 85 cents.

Optimism about Union Pacific Corp.'s planned merger with Southern Pacific Corp. helped drive up the Dow Jones transportation average 19.98 to a record 2,221.06. Union Pacific rose $2.375 to $70.125 and Burlington Northern Santa Fe gained $2 to $84.50.

Most computer, semiconductor and software stocks rebounded. Motorola Inc. climbed $2.625 to $60.125; Intel Corp. rallied $1.5625 to $65.75; and Hewlett-Packard Co. climbed $1.50 to $99.875. IBM added 25 cents to $105.50 a day after dumping $10.25.

Advancing stocks outnumbered declining issues by about 4 to 3 on the New York Stock Exchange, where volume fell to 415 million shares from 453 million yesterday.

Drug makers rallied after Amgen, Warner-Lambert Co. and Schering-Plough reported first-quarter profits that exceeded or matched expectations. The results followed double-digit growth reported earlier this week by rivals Pfizer Inc., Merck & Co. and Johnson & Johnson.

Shares of Amgen, a biotechnology company, surged $4.125 to $57.25. The stock was added to a "recommended list" at Goldman, Sachs & Co. and raised to "attractive" at Bear Stearns & Co. after reporting 32 percent growth in first-quarter profits late yesterday.

Warner-Lambert surged $1.125 to $111.50 after the maker of Chiclets chewing gum said first-quarter profits widened to $1.84 a share from $1.50 last year, above estimates of $1.54.


Schering-Plough's earnings climbed to 89 cents a share from 75 cents in the year-earlier period, beating forecasts of 87 cents. Its stock rose 87.5 cents to $58.50.

More companies came out with positive earnings surprises yesterday.

Gillette Co. vaulted $3.125 to $52. The toiletry and cosmetics maker boosted profits 17 percent in the first quarter, raised its dividend and said it would buy back as many as 15 million shares.

Among other companies that gained after reporting earnings, DSC Communications spurted $2.50 to $29.125. The maker of telecommunications equipment earned 10 cents a share in the first quarter, down from 36 cents last year but matching analysts' estimates.

Fair, Isaac Co. shares vaulted $5.25 to $39.50. The computer and software company said fiscal second-quarter net income reached 34 cents a share, up from 23 cents last year and analysts' estimate of 28 cents.

Pub Date: 4/19/96