Stocks sag, rebound for more records But Nasdaq slumps with computer firms; Dow index at 6,020

NEW YORK — NEW YORK -- U.S. stocks rebounded from early losses yesterday to push the Dow Jones industrial average and Standard & Poor's 500 index to records. Gains in telephone shares tempered a computer-industry slump led by Sun Microsystems Inc.

For a second day, a round of better-than-expected earnings reports from the nation's biggest companies was met with a lackluster early response, but by day's end, stocks regained lost ground.


The Dow industrials rose 16.03 to 6,020.81, making up about 50 points, 35 in the last hour. Gains in Philip Morris Cos., Sears, Roebuck & Co. and United Technologies Corp. spurred the 30-stock average, which topped its record 6,010 Monday.

The broader market was mixed. The Nasdaq composite index dropped 7.11 to 1,250.99 after a record Tuesday, and the S&P; 500 rebounded at the day's end to close at 704.41, up 1.84.


The Russell 2,000 index of small capitalization stocks fell 0.65 to 348.36; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq stock exchanges, gained 4.60 to 6,898.03; the American Stock Exchange market value index climbed 0.87 to 576.52; and the S&P; 400 midcap index fell 0.27 to 244.64.

Among the biggest gainers were shares of telephone companies, in the wake of a decision Tuesday by a federal appeals court to freeze contentious new pricing rules designed to open local phone markets to competition.

GTE Corp. climbed $3.625 to $42.25; BellSouth Corp. gained $2.50 to $38.875; SBC Communications Inc. jumped $1.75 to $49.50; Ameritech Corp. rose $1.75 to $56.125; and Bell Atlantic Corp. gained $2.125 to $60.875.

About 1,233 stocks fell and 1,167 issues rose on the New York Stock Exchange, where 441 million shares traded. The three-month daily average is 383 million shares.

Sun Microsystems was the biggest loser in the S&P; 500 and Nasdaq, falling $6.875 to $63.125 in trading of almost 18 million shares. The maker of computer servers and workstations said it earned 63 cents a share in its first quarter, which ended Sept. 29.

The earnings beat the average Wall Street estimate of 61 cents a share, but analysts said more was expected of Sun, whose shares more than doubled in the past year. And, rivals are seen as likely to make inroads into Sun's sales and earnings.

Stocks were also hampered most of the day by a rise in bond yields. The yield on the benchmark 30-year bond rose as much as six-hundredths of a percentage point to 6.90 percent before falling back to 6.85 percent.

Compaq Computer Corp. said third-quarter net income rose to $1.25 a share from 89 cents a year ago. The results beat the most optimistic estimates of analysts who follow the company. Compaq's stock, which rose to a record Tuesday, fell $1.125 to $73.625.


Computer Associates International Inc.'s stock fell $2.875 to $62.875, even after the world's third-biggest software company said earnings jumped 31 percent, beating estimates.

Computer-industry stocks took the brunt of the day's losses, with the Morgan Stanley High Tech index falling 3.12 to 363.19. Parametric Technology Co. slid $2.6875 to $51.1875; Linear Technology Corp. fell $4.50 to $35.625; Tellabs Inc. dropped $2.75 to $79.75; and Synopsys Inc. fell 75 cents to $45.75.

Shares of Sears climbed $2 to $50.50, and helped the Dow's advance. The retailer's third-quarter profit rose 22 percent on strong sales of apparel and gains at its hardware, furniture and auto specialty stores.

Some stocks fell for reasons unrelated to earnings reports or the outlook for interest rates. Olympic Financial Ltd.'s shares tumbled $3.375 to $17 after the automobile loan company said potential buyers of the firm had lost interest.

American Service Group Inc. fell $4.875 to $10.50 after the lTC manager of inmate health-care programs said its contract with the Georgia Department of Corrections wouldn't be renewed when it ends June 30.

Pub Date: 10/17/96