Stocks Recover From Afternoon Drop, Edge Up

Stocks edged higher in sluggish trading Wednesday as interest rates steadied in the bond market and a strong earnings report from the computer sector helped lift technology shares.

The Dow Jones industrial average rose 19.60 to 5,666.88, shrugging off an early-afternoon deficit of 17 points.

Broader measures also overcame a brief afternoon retreat as interest rates dipped in the bond market from Tuesday’s jump on a series of economic reports that revived inflation jitters.

“This market has got an upward bias if interest rates can stay flat or move down,” said Richard E. Cripps, chief market strategist for Legg Mason of Baltimore.

Advancing issues outnumbered decliners by an 8-to-5 margin on the New York Stock Exchange, where volume reached 343.43 million shares as of 4 p.m., slightly higher than Wednesday’s summer-time pace.

Some of the stocks that moved substantially or traded heavily Wednesday:

NYSE

Ralcorp Holdings, up 2-1/2 at 22-1/2.

General Mills, the nation’s second-biggest cereal maker, agreed to buy Ralcorp’s Chex cereal and snack lines for $570 million in stock and assumed debt.

American Re, up 4-1/2 at 62-7/8.

Munich Re, the world’s biggest reinsurer, agreed to pay $3.3 billion, or $65 per share, for American Re. The investment firm Kohlberg Kravis Roberts & Co., which paid $1.4 billion for American Re in 1992, agreed to sell its remaining 64 percent stake in the company.

Federated Department Stores, up 7/8 at 33-3/4.

The Cincinnati-based retailer, parent of The Bon Marche and other chains, lost $27.2 million in the company’s second quarter, mostly because of costs associated with integrating the Broadway Stores group. But the loss of 13 cents a share for the three months ended Aug. 3 was smaller than expected.

NASDAQ

Dell Computer, up 4-1/8 at 60-3/4.

The computer maker exceeded analysts’ earnings estimates for the second quarter. Late Tuesday, Dell reported that its profit for the period surged 58 percent to $103 million, or $1.05 a share.

ValuJet, down 5/8 at 10-1/4.

The discount carrier will be in violation of certain covenants related to some of its aircraft-secured debt by Sept. 30 unless it can negotiate agreements with its lenders, according to an SEC filing.

AMEX

Oshman’s Sporting Goods, down 1-1/16 at 6-3/8.

The Houston-based retailer expects a loss for its second fiscal quarter, ended Aug. 3, of between $8 million and $8.5 million, or about $1.35 to $1.40 per share.