Foreign Market Gains Spark Rally

Stocks rallied Tuesday, pushing most indexes into positive territory for 1998, as another strong day on foreign markets enabled investors to focus on a potential megamerger and some solid profit reports by major companies.

The Dow Jones industrial average rose 119.57 to 7,873.12, the first 100-point gain of the new year for the struggling blue-chip barometer.

Broader measures also posted big gains, with most wiping out the remainder of their early 1998 losses.

Although the gains on Asian markets were fairly modest Tuesday, the continuing recovery set a positive tone for Wall Street’s return from a three-day holiday weekend.

“There was a lot of stuff coming together that was positive,” said Charles Pradilla, chief investment strategist at Cowen & Co. “We’ve had huge rallies in Asia. You can look through whatever color glasses you want. Maybe it’s not the end (of the Asian fiscal crisis), but it’s encouraging.”

Advancing issues outnumbered decliners by a 2-to-1 margin on the New York Stock Exchange, where volume totaled 644.79 million, the 10th time in 12 sessions this year that more than 600 million shares have changed hands.

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

NYSE

Chase Manhattan, up 1-11/16 at 107-3/16

Citicorp, down 7/8 at 119.

J.P. Morgan, down 1-5/8 at 105-1/4.

Chase and Citicorp, the nation’s two biggest banks, reported improved fourth-quarter profits as troubles in Asia were offset by strength in other businesses. But J.P. Morgan, the No. 3 banking company, reported that its fourth-quarter profit fell 35 percent due to the Asian crisis.

American Home Products, up 13-9/16 at 94-1/4.

SmithKline Beecham, up 2-9/16 at 59-9/16.

Merck, up 5-3/4 at 115-1/2.

Warner Lambert, up 9-1/8 at 138-1/4.

London-based SmithKline is discussing a merger with rival drug maker Madison, N.J.-based AHP, a deal that would likely be the biggest corporate combination ever.

NASDAQ

Regal Cinemas, down 13/16 at 29-7/16.

Hicks, Muse, Tate & Furst Inc. and Kohlberg Kravis Roberts & Co. agreed to buy the nation’s No. 2 movie theater chain for $31 a share, or about $1.2 billion, plus $290 million in assumed debt.

Buttrey Food & Drug Stores, up 4-1/2 at 15-1/4.

Albertson’s agreed to acquire Buttrey for $15.50 a share, or $134 million. Buttrey, based in Great Falls, Mont., operates a chain of 43 food and drug stores in Montana, North Dakota and Wyoming.