NEW YORK -- U.S. stocks rose yesterday as investors snapped up shares of software companies such as Microsoft Corp. on expectations that their profit growth will match or exceed investors' forecasts.
The Morgan Stanley high-tech index gained 1.3 percent, rising for the fifth time in seven days as computer stocks recovered from losses earlier in the second quarter that were triggered by falling prices and slowing demand.
Microsoft rose $3 to $107.4375; Dell Computer Corp. gained $1.75 to $94.125; Compaq Computer Corp. rose 37.5 cents to $29.3125; and Cisco Systems Inc. rose $1.9375 to $91.8125. They were among the seven most-active stocks on U.S. exchanges.
Among software companies, Compuware Corp. gained $2.875 to $49.75, and Computer Sciences Corp. rose $2.3125 to $64.75.
Semiconductor stocks were the exception. Most fell, after Intel Corp. cut prices on its chips for laptop computers by as much as 37 percent. Analysts said the world's largest chip maker may slash prices further in the next few months, which could jeopardize second-half earnings. Intel dropped 56.25 cents to $75.8125.
Among other broad market indexes, the Russell 2,000 index of small capitalization stocks rose 3.56 to 453.83; the Wilshire 5,000 index gained 63.88 to 10,681.55; the American Stock Exchange pTC composite index climbed 2.94 to 720.81; and the S&P; 400 midcap index added 3.08 to 360.57.
The Bloomberg Maryland index, which tracks the top 100 stocks in Maryland by market valuation, rose 2.43 to 234.08.
Volume on the New York Stock Exchange totaled 544 million shares, up from 516 million Friday, and advancing stocks led declining stocks by a ratio of 3-to-2 on the Big Board.
Stocks got a boost from the Bank of Japan's widely watched "tankan" survey of 10,000 business managers, which showed Japanese executives unexpectedly optimistic for a rebound in their nation's stumbling economy.
The Federal Reserve's policy-setting Federal Open Market Committee meets today and tomorrow. Most investors expect the Fed to leave benchmark interest rates unchanged, which would be bullish for stocks.
Young Broadcasting Inc. jumped $16.3125 to $63.8125 after the owner of 12 television stations said it hired investment banking firm Lazard Freres & Co. to explore strategic options, including the company's sale, to boost the value of its shares.
Excite Inc. surged $9.875 to $85.875 as the No. 2 Internet directory company said it will split its stock 2 for 1 in a bid to broaden ownership of its shares.
Pfizer Inc. fell $1.9375 to $110 after the Wall Street Journal reported that the Food and Drug Administration received about 100 reports of men suffering serious adverse reactions or dying after taking Viagra, the company's impotence treatment. FDA regulators still believe the drug is safe.
Investors were quick to punish companies that warned of earnings shortfalls. Ikon Office Solutions Inc. tumbled $6.75 to $15.3125 after the seller of photocopiers, fax machines and other office equipment said earnings for the fiscal third quarter ending today will be "significantly below" the First Call Corp. estimate of 34 cents a share.
Cash America International Inc. fell $4.5625 to $15.625 after the pawnshop chain said second-quarter earnings will be half the 12 cents a share reported in the year-ago period because of higher costs for a new automated check-cashing machine. The company had been expected to earn 11 cents, the average estimate of five analysts by IBES International Inc.
Paper stocks fell on concern that slowing economies around the world will reduce demand for forest products. While companies are cutting the rate at which they open new paper plants, consumption is falling faster, Merrill Lynch & Co. analyst Sherman Chao said in a report to clients.
He cut his 1998 earnings forecasts on several paper companies and introduced 1999 estimates that are below the Wall Street consensus.
International Paper Co. dropped $1 to $42.875, and Union Camp Corp. fell 81.25 cents to $49.375.
Pub Date: 6/30/98