Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!news.media.mit.edu!americast.com!americast.com!usa-post Newsgroups: usa-today.invest From: usa-post@AmeriCast.Com Organization: American Cybercasting Approved: usa-post@AmeriCast.com Subject: invest Wed, May 13 1992 Date: Wed, 13 May 92 05:40:09 EDT Message-ID: 05-13 0000 DECISIONLINE: Personal Investing USA TODAY Update May 13, 1992 Source: USA TODAY:Gannett National Information Network GOOD NEWS GIVES HOPE: Better-than-expected first-quarter earnings reports from companies in the Standard & Poor's 500 index are giving stock market analysts reason to believe things are getting better. Analysts saw the improved earnings as a sign that the economic recovery is under way. And that was enough to pump analysts' expectations for coming quarters. (For more, see special Earnings package below.) STOCKS OFF AFTER RECORD CLOSE: Stock prices retreated Tuesday, a day after a record high and a day ahead of the government's latest report on consumer inflation. The Dow Jones average of 30 industrial stocks fell 12.46 to 3,385.12. Broader indexes were mixed. Advancers trailed decliners 750 to 980 on the New York Stock exchange, where volume was 193 million shares. DILLARD BEATS ESTIMATES: Retailers reported a mixed bag of earnings Tuesday, and Wall Street quickly sorted out the winners and losers. Among the winners, Dillard Department Stores shares rose 3 3:8 at $123 1:4. Dillard posted first-quarter earnings of $1.21 a share - topping most analysts' estimates by about 6 cents. AnnTaylor Stores stock rose 1 5:8 to $22 7:8 on its reduced expenses. LIMITED EARNINGS UNCHANGED: The Limited got a thumbs down from investors Tuesday. Its shares fell 2 3:4 to $21 3:4 after the retailer reported first-quarter earnings of 14 cents a share, the same as last year. Revenue hit $1.4 billion, up from $1.3 billion. Other retail stocks falling included Gap, down 1 1:2 at $41 1:4; Nordstrom, down 1 1:4 at $32 3:4; and Melville, down 1 3:8 at $48 5:8. APPETITE LOST FOR SBARRO: Italian restaurant chain Sbarro said Tuesday that its first-quarter earnings slid 22% to 28 cents a share from 36 cents last year, news that sent its stock down 11 points to a 52-week low of $27. The earnings dip came despite a 14% revenue rise. Company officials didn't return telephone calls for comment. Analysts had predicted earnings of 40 cents to 43 cents a share. LENDERS MOVE ON RATE HOPES: Hopes that the Federal Reserve will increase the money supply - a move that would lower interest rates - boosted stocks of companies that benefit from falling rates. Federal National Mortgage Association gained 1 3:8 to $65 Tuesday. Federal Home Loan Mortgage added 1 to $42 5:8. Student Loan Marketing rose 5:8 to $64 1:2. WELLS FARGO RATED A BUY: Shares of Wells Fargo and First Interstate fell Tuesday, paring gains made Monday on rumors that the banks were close to a merger. Wells Fargo fell 2 3:8 to $84 and First Interstate fell 1 1:2 to $42 7:8. Both have declined to comment on reports that they might merge. Brown Bros. rated Wells Fargo a buy. PRECIOUS METALS LOSE GROUND: Gold prices declined Tuesday in worldwide trading. On the New York Commodity Exchange, gold bullion for current delivery settled at $335.30 a troy ounce, off $1.40 from Monday. Republic National Bank said gold fell $1.70 an ounce to a late bid price of $334.60. Gold fell in London and Zurich. On the Comex, silver bullion for current delivery settled at $4.089 a troy ounce, down from $4.092. SPECIAL PACKAGE ON EARNINGS: ANALYSTS ARE RAISING ESTIMATES: "Analysts have been significantly raising earnings estimates for this year and next," says Ben Zacks, who runs Zacks Investment Research, which tracks analysts' earnings estimates. Earnings for the S&P 500 were an average 4% above analysts' consensus estimates, according to Zacks. Expectations for the first quarter were not high - $5.28 a share for the S&P 500, just 3% above last year. ANALYSTS DROPPING CAUTION: Any strength in earnings is welcome. Now, analysts are dropping some of their caution. In the 30 days before mid-April, when first-quarter earnings reports began to come out in force, less than one-third of all earnings-estimate changes were upward. Now, Zacks says, nearly half of all revisions are for the better. Zacks says it's the first time that has happened in more than two years. NOT ALL IMPRESSED: More than a few analysts are unimpressed with what they've seen. "It's more like a sprinkling of surprises among a number of prominent companies," says Arnold Kaufman, editor of S&P's Outlook. Indeed, well-known companies such as Ford, Goodyear and Wells Fargo all came through with better-than-expected earnings. Meanwhile, earnings of many other companies remained weak. THE WHERE IS WHAT'S IMPRESSIVE: The bulls argue that the quantity of positive reports is not as important as where the strength is found. Richard Hoffman of Cowen & Co. notes that earnings gains are coming through in basic industries such as automakers, aluminum producers and chemical companies. Rising earnings in those industries confirm analysts' belief that the economy is strengthening. (End of package.) DOW JONES OPENS ON DOWNSWING: The Dow Jones average of 30 industrials opens Wednesday at 3385.12 after closing down 12.46 points Tuesday. The New York Stock Exchange composite opens at 229.45, down 1.02. The American Stock Exchange market value opens at 393.46, down 2.38. The NASDAQ OTC composite opens at 583.96, down 3.17. DOLLAR OPENS DOWN OVERSEAS: The dollar opens down on Wednesday. It opens at 0.5515 British pounds, down from 0.5577; 5.4460 French francs, down from 5.5125; 1.6226 German marks, down from 1.6403; and 130.38 Japanese yen, down from 133.04. (As of 3 p.m. Tuesday. Source: First American Bank of New York.) 24-HOUR TELEPHONE INFORMATION: USA TODAY Money Hot Line. 95 cents a minute. 1-900-555-5555. Personal Investing Editor: William Snoddy. (1-919-855-3491) Making copies of USA TODAY Update (Copyright, 1992) for further distribution violates federal law. This article is copyright 1992 Gannett News Service. Redistribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM