Stocks rebound after sell-off Dow industrials, once down 55 points, end day 32 higher


NEW YORK -- U.S. stocks climbed out of an early hole amid reassurances that borrowing costs can hold steady and that oil deliveries will continue during the conflict in the Middle East.

The Dow Jones industrial average recovered from a decline of almost 55 points to close at 5,648.39, up 32.18. Texaco Inc. and Exxon Corp. spearheaded the advance in the 30-stock average on the back of higher crude oil prices.

Stocks tumbled at the opening after President Clinton ordered the launch of a 27-missile attack on Iraq, raising the possibility that a conflict could disrupt the flow of oil, then recovered after Defense Secretary William Perry made clear that U.S. interests include "protection of the flow of oil."

The Standard & Poor's 500 index dropped 7.73 early yesterday before rebounding to 654.72, up 2.73. Oil and gas stocks topped the list of advancers. The Nasdaq composite index was little changed at 1,142.29, up 0.79, after falling more than 18 points.

The Russell 2,000 index of smaller shares fell 0.50 to 333.38; the Wilshire 5,000 index, which includes stocks on the NYSE, Nasdaq stock market and American Stock Exchange, rose 10.65 to 6,444.68; the American Stock Exchange market value index dropped 1.89 to 557.79; and the S&P; midcap index slid 0.92 to 231.21.

Declining shares outnumbered those that advanced on the New York Stock Exchange 1,395 to 1,027.

Among financial stocks, J. P. Morgan & Co. gained $1 to $88.50; First USA Inc. rose $1.25 to $54.25; and Wachovia Corp. edged up 25 cents to $46.

Among oil stocks, Texaco jumped $3.125 to $91.875; Exxon climbed $2.125 to $83.625; and Chevron tacked on $1 to $59.875. Crude oil for October delivery rose $1.15 cents to $23.40 a barrel in New York.

Shares of DuPont Co. rose $1.375 to $83.50 as the profit outlook for its Conoco Inc. oil exploration and refining division brightened. Oil service shares such as Diamond Offshore Drilling Inc., up 50 cents to $51.50, gained as higher prices were expected to boost exploration budgets. BJ Services Co. rose $1 to $38.625.

"What you really have to focus on is the fragility of this whole Middle East thing, a permanent higher floor on the price of oil," said Larry Rice, director of research at Josephthal, Lyon & Ross.

Airline stocks were bruised in reaction to rising oil prices. The Philadelphia Stock Exchange airline index dropped 8.66 to 355.90, led by Delta Air Lines Inc., which sank $2 to $68.875. Southwest Airlines Co. retreated 37.5 cents to $22.50, and Northwest Airlines Corp. Class A shares fell 50 cents to $37.25.

USX-U.S. Steel group rose $2 to $29.50, and Nucor Corp. sprinted $1.875 to $48.625.

The yield on the benchmark 30-year Treasury bond, which helps set borrowing costs for the private sector, fell to 7.05 percent, down 7 basis points from Monday's London trading.

Intel Corp., the world's largest chip maker, jumped $1.8125 to $81.625 after Robertson, Stephens & Co. raised its 1996 estimates by 15 cents to $4.65 and its 1997 estimates by 25 cents to $5.75.

Networking company Cisco Systems Inc. jumped $1 to $53.75 after it said it would buy closely held Granite Systems, a fellow computer-network equipment maker, for $220 million.

Oracle Corp. shares added $2 to $37.25, its first climb in four days.

Pub Date: 9/04/96

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