NEW YORK -- U.S. stocks rose in seesaw trading yesterday as better-than-expected earnings from Pfizer Inc. spurred a drug share rally. Texas Instruments Inc. and Intel Corp. led a slump in computer-related issues.
Companies that exceeded earnings forecasts didn't necessarily benefit. Texas Instruments, along with General Motors Corp. and Merrill Lynch & Co., beat the average profit forecast only to see their stocks drop.
Analysts said 18 straight quarters of unexpectedly strong earnings have sent expectations so high that investors can dismiss even good news.
"Stock investors are getting used to earnings topping expectations, and the unexpected now is perhaps when a company meets expectations," said Timothy Morris, co-chief investment officer at Bessemer Trust Co., which oversees $14 billion. "Plus, we've rallied the last couple of weeks, so when the earnings come out, short-term traders take their profits."
The Dow Jones industrial average rose 24.07 to 8,096.29, recovering from an early-afternoon drop of 53 points.
The Standard & Poor's 500 index rose 2.18 to 970.28 and the Nasdaq composite index fell 9.33 to 1,732.79. Both indexes set records last week.
Among other broad-market indexes, the Russell 2,000 index of small capitalization stocks lost 1.24 to 463.97; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq stock exchanges, climbed 6.36 to 9,403.22; the American Stock Exchange composite index added 1.78 to 714.79; and the S&P; 400 midcap index slid 0.44 to 338.70.
Merck & Co. was among the Dow's biggest gainers, rising $1.5625 to $101.50. Drug shares got a boost after Pfizer said it earned 46 cents a share in the third quarter, topping the 44 cents analysts expected. Pfizer jumped $3 to $67.875; Eli Lilly & Co. climbed $3.0625 to $127.8125; and Warner-Lambert Co. rose $1.25 to $141.25.
Some 1,436 stocks rose and 1,404 fell on the New York Stock Exchange, where 510 million shares changed hands. The three-month daily average is 530 million shares.
Semiconductor shares fell even after Texas Instruments said third-quarter profit skyrocketed on strong demand for specialized computer chips. Profit from continuing operations rose to $239 million, or $1.20 a share, above the $1.14 forecast.
Intel reported third-quarter profit of 88 cents a share, below the 90 cents analysts forecast. The company's earnings and forecast for the semiconductor business shape perceptions about the computer industry. Intel's stock, which fell 75 cents to $91.8125, fell as low as 86.50 in electronic trading after the market closed.
Texas Instruments fell $5.4375 to $135.5625, after gaining more than 10 points over last week.
VLSI Technology Inc. slipped $3.1875 to $73.625. Compaq Computer Corp. slid $2.8125; Hewlett-Packard Co. dropped 37.5 cents to $68.0625 and International Business Machines Corp. lost $1.1875 to $103.3125.
In the year that ended Sept. 30, Intel's stock surged 93 percent, more than double the 38 percent advance of the S&P; 500. Intel's stock over that time was the 31st-best performer in the S&P; 500; Dell Computer Corp.'s 400 percent gain topped the list.
Earnings overall have topped expectations. Of the 95 companies in the S&P; 500 to report last quarter's profits, 56 percent topped estimates, 25 percent fell short and 19 percent were in line.
Merrill Lynch' stock, which is up 87 percent this year, fell 93.75 cents to $76.0625. The firm said it earned $1.25 a share in the third quarter, bettering the $1.21 a share analysts expected.
GM, which rose about 5 percent in the three prior sessions, fell $1.0625 to $70.375. The nation's No. 1 automaker said it earned $1.1 billion, or $1.35 a share, in the third quarter, topping the $1.21 estimate from analysts. Chrysler Corp., which beat earnings estimates last week, rose 68.75 cents to $36.8125.
Pub Date: 10/15/97