Dow Shoots Up, But Computer Shares Skid
The Dow Jones industrials ended Friday’s session higher after swinging widely, but the broader market was hit hard by a drop in computer shares.
The Dow industrial average added 50.94 points to 5,536.56, ending in the positive column for the first time this week. The blue-chip index lost 93.93 points for the week.
The Dow average rose at the open, dropped to minus 49 points, then moved as much as 30 points higher before paring and then reestablishing and surpassing those gains. Traders said computerized trading was responsible for some of the sharp moves in the Dow.
“The Dow is trading like a pork-belly future,” said Larry Wachtel, a market analyst for Prudential Securities. “It swings like a commodity with no rhyme or reason, no connection to facts and figures, or to announcements.”
Advancing issues led decliners on the New York Stock Exchange by about 8 to 5 late in the day. Big Board volume was moderately heavy at 471.36 million shares as of 4 p.m., above Thursday’s pace.
Computer issues dropped broadly after Compaq Computer said its first-quarter profit margin likely will fall below that of the previous quarter.
“They’re whacking technology around,” Wachtel said, “and that stemmed from Compaq.”
Some of the stocks that moved substantially Friday:
NYSE
Compaq Computer Corp. fell 8-7/8 to 41-3/4.
The Houston computer maker said its first-quarter profit margin likely will fall below that of the previous quarter, citing competitive pressures. Compaq said it will take steps to boost sales, which are running below its first-quarter target.
LSI Logic fell 1-7/8 to 25-3/4.
SoundView Financial Group Inc. Thursday lowered its 1996 earnings estimates to a range of $1.25 to $1.50 a share from $2.10. SoundView lowered its 1997 earnings estimates to a range of $1 to $2 a share from $2.65. SoundView maintained its short-term hold rating and its long-term buy rating.
AlliedSignal Inc. rose 1-5/8 to 57-1/4.
AlliedSignal, giving up on much of its automotive business, agreed to sell its struggling hydraulic and antilock-braking business for light vehicles to Robert Bosch GmbH of Germany for $1.5 billion.
Bay Networks Inc. fell 4-7/8 to 35-3/4.
The stock sank for a second day with market sources citing growing worries about the company’s third quarter.
NASDAQ
Xilinx fell 7-3/8 to 31-1/4.
Hambricht & Quist downgraded the stock to hold from buy, and SoundView Financial lowered its near-term rating to hold from buy while maintaining its long-term hold rating. SoundView said demand in North America is not quite as robust as originally anticipated. The San Jose, Calif. company makes programmable logic devices for computers.
Nordstrom rose 4-3/8 to 49-1/2.
The department-store chain’s shares hit a 52-week high, benefiting from positive sales trends that also are seen lifting other retail stocks. A retail analyst at Bear Stearns said retailers were reporting stronger sales for February.