Dow Responds To Optimism Over Budget Talks

Stocks rose Thursday, rebounding from a sharp sell-off the day before, amid signs that federal budget talks in Washington may be back on track.

The Dow Jones industrial average climbed 37.21 points to 5,096.53, recovering most of a 50-point drop Wednesday after the budget negotiations broke down for the second time.

In a tentatively hopeful sign, Senate Majority Leader Robert Dole, R-Kan., and House Speaker Newt Gingrich, R-Ga., said they would meet with President Clinton and other budget leaders this morning to try to agree on a framework toward balancing the federal budget.

That news strengthened a tendency already in place to bid stock prices higher after Wednesday’s sell-off, said Ricky Harrington, a technical analyst at Interstate-Johnson Lane in Charlotte, N.C.

Advancing issues led decliners by 3 to 2 on the New York Stock Exchange. Big Board trading volume was moderately heavy at 415.78 million shares as of 4 p.m., but below Wednesday’s pace.

Some of the stocks that moved substantially Thursday:

NYSE

KMart rose 1-5/8 to 7-5/8.

The discount retailer said late Wednesday that its directors had voted to eliminate its common stock dividend, remove troublesome “put” provisions on $548 million of debt, and to extend certain revolving credit facilities.

Quaker Oats fell 3/4 to 34-7/8.

The company expects to report a loss of about 35 cents to 45 cents per share for the second quarter ending Dec. 31, below Wall Street expectations of a 5-cent gain. The Chicago-based food giant blamed the projected loss on a $55 million operating loss for Snapple.

UAL fell 17-7/8 to 180-1/8.

The parent company of United Airlines confirmed that its fourth-quarter results would fall slightly below analysts’ expectations of $3.17 per diluted share, citing inclement weather, a weaker yen and fare competition. First Boston downgraded the stock to “hold” from “buy.”

NASDAQ

Unitech Industries fell 8-1/2 to 2-1/4.

The company warned it will report a “significant” loss for its fiscal year ended Oct. 31, and said it may be forced to seek bankruptcy protection.

AMEX

Samuel Goldwyn Co. fell 1/8 to 3-3/4.

Metromedia fell 1/8 to 14-1/8.

PolyGram NV agreed in principle to acquire worldwide distribution rights to the Samuel Goldwyn’s film and television library for $62 million. Hours later, Metromedia International said it wants to buy the entire independent film company for $115 million.