Retailers lead way to another advance Stocks lifted by earnings, $5 billion Merck buyback; Dow rises 29 to 7,037

NEW YORK — NEW YORK -- U.S. stocks rose for a second day yesterday, led by retailers after surprisingly strong earnings from Wal-Mart Stores Inc. and Home Depot Inc.

The Dow Jones industrial average rose 29.63 to 7,037.83, led by Minnesota Mining & Manufacturing Co., after being down 35. Merck & Co. helped spark the rebound after announcing that it would buy back as much as $5 billion in stock, shrinking a $2.375 loss to close at $97.75, down 62.5 cents.


The S&P; 500 index rose 1.75 to 812.03, and the Nasdaq composite index rose 2.61 to 1,347.69.

On the broader market, the Russell 2,000 index of small capitalization stocks rose 0.34 to 366.79; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq exchanges, gained 20.16 to 7747.56; the American Stock Exchange composite index climbed 1.92 to 599.99; and the S&P; midcap index added 1.62 to 267.66.


Better-than-expected earnings from Wal-Mart, Home Depot and Limited Inc. helped retailers rally. The S&P; index of big retailers like Wal-Mart and Sears, Roebuck & Co. is up 16 percent this year.

Wal-Mart rose $1.75 to $26.375. The Bentonville, Ark.-based retailer said it earned 48 cents a share in the fiscal fourth quarter, up 17 percent from 41 cents a year ago. The results topped the 47 cents analysts estimated as sales and profits jumped at each of the company's units.

The world's largest retailer said net income rose to $1.10 billion from $942 million a year earlier.

Home Depot gained $2.875 to $55.125 after the retailer said it earned 52 cents a share in the quarter ended Jan. 31, above the 49 cents forecast.

The company said it earned $251.1 million in its fiscal fourth quarter ended Feb. 2, compared with year-earlier earnings of $185.3 million, or 39 cents a share, a year earlier. Sales jumped 32 percent to $5.0 billion from $3.8 billion.

For the year, Home Depot said it earned $937.8 million, or $1.94 a share, on sales of $19.5 billion against year-earlier profits of $731.5 million, or $1.54 a share, on sales of $15.4 billion.

Limited rose 50 cents to $18.50, helped by a profit of 78 cents a share that beat forecasts by a penny. Dow member Woolworth Corp. gained $1.375 to $21.50.

The American Stock Exchange pharmaceutical index fell 0.64 to 420.69, as Eli Lilly & Co. lost 75 cents to $93.625, Pharmacia & Upjohn Inc. slid 75 cents to $37.75 and Pfizer Inc. dropped $1.375 to $95.25. Bristol-Myers Squibb Co. bucked the trend, rising $2.875 to $136.75.


Merck, whose shares are up 23 percent so far this year, trades at about 26 times the $3.73 a share that the drug company is expected to earn this year. By comparison, the average company in the S&P; 500 index trades at 17.7 times projected earnings.

Cisco Systems Inc. fell $2.50 to $56.50 after Chief Executive John Chambers reiterated several cautions about Cisco and the computer networking industry. Almost 29 million Cisco shares traded, making it the most active U.S. stock. Cisco is down 25 percent from an all-time high of $74.875 Jan. 21.

Among the day's biggest gainers was EchoStar Communications Corp., which rallied $8.75 to $26.75 after News Corp. agreed to buy a 50 percent stake. The transaction turns two weak satellite ventures into a strong U.S. satellite TV broadcaster. News Corp.'s American depositary receipts rose 62.5 cents to $21.875.

Boeing Co. rose 75 cents to $106.25 after the aerospace company said it will split its shares 2 for 1, its first split since 1990.

Centennial Technologies Inc. more than tripled before trading was suspended, as small investors bet that shares of the computer equipment company had fallen to bargain prices.

The shares plunged 88 percent last week after the arrest of Centennial's founder and former chief executive and discovery of falsified accounting records. Centennial gained $10.25 Monday to $14.75 in trading of 13.5 million, 11 times the three-month daily average.


Pub Date: 2/26/97