Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!americast.com!americast.com!americast-post Newsgroups: americast.ibd From: americast-post@AmeriCast.Com Organization: American Cybercasting Approved: americast-post@AmeriCast.com Subject: Inside The Market Date: Fri, 13 Nov 92 13:07:19 EST Message-ID: <4.1992Nov13.130720@AmeriCast.com> 11/13/92 TITLE Inside The Market Dow Flat On 226 Mil As Market Churns: Drug And Insurance Stocks Extend Gains #m#Picture ...Stephen Leeb.............#m# Leo Fasciocco The stock market churned yesterday, finishing mixed in heavy trading despite strength in the drug and insurance sectors. The Dow Jones industrial average closed off 0.56, or 0.02% at 3239.79. The broad list did a little better as gainers rallied to edge losers 902 to 862. Trading remained heavy, although easing 6% to 225 million shares. "The market's action was lackluster," said Stephen Leeb, who manages the $41 million Leeb Personal Finance Fund of Alexandria, Va. "I read the heavy volume as bearish - churning. Even though a nominal high in the Standard & Poor's 500 index could be made, I do not see any big bull move this year." The S&P 500 index rose 0.16%. The Nasdaq composite index, after a big day Wednesday, gave back 0.09%. "The months of November and December have been good for the bulls," Leeb noted. "Over the past 42 years November has risen 27 times and been down 15, while December has been up 30 times and down only 12. There has never been a major decline during November and December." Nevertheless, Leeb expects a correction of 10% to 15% early in 1993. He thinks stocks are overvalued and believes short-term interest rates will rise. But looking ahead about four years, he is bullish and sees the Dow climbing to 5000 on a strong economy. Therefore, he sees any correction as a buying opportunity and expects Over-The- Counter stocks to continue to do well. Leeb's mutual fund, up 5.3% so far this year, has never been more than 50% invested in stocks. He said the fund is risk-averse and is positioned for a correction. The fund's most recent purchase was American Telephone & Tele- graph Co. Leeb likes it because of the company's purchase of a stake in McCaw Cellular Communications Inc. He believes a nation- al cellular telphone network is in the making and sees AT&T achieving 15%-a-year growth. AT&T- rose 1/4 to 457/8. Merck & Co., up 2 Wednesday, gained another 7/8 to 453/4. Several other drug stocks followed through on prior- day gains. Eli Lilly & Co. was up 13/8 to 635/8 and Warner Lambert Inc. 13/8 to 703/4. Among overseas drug companies, Novo Nordisk A.S. climbed 17/8 to 863/4 and Rhone-Poulenc S.A.- 11/2 to 501/2. Insurance stocks, a strong group, moved higher. American International Group Inc. drove ahead 2 to 115, Cigna Corp. 21/8 to 531/2 and General Re Corp. 23/4 to 1133/8. The Street is anticipating a rise in rates that will boost earnings. MGIC Investment Corp. leaped 21/8 to a new high closing at 451/2. The company, which provides mortgage insurance to S&Ls and mort- gage bankers, has an Earnings Per Share rank of 95. Net income is expected to be up 21% this year. Philip Morris Cos. led the blue chips by rising 11/2 to 791/4 after Kidder, Peabody & Co. put out a buy on the food and tobacco giant. The broker also projected 18% growth in the company's earnings. The stock has been weak. Its Relative Strength has fallen to 54 from 73 two months ago. The day was not without its disasters. A.L. Laboratories Inc. class A stock fell 83/4 to 183/4. The stock was downgraded by County Natwest Securities after the generic-drug firm reported disappointing third-quarter operating earnings of 13 cents a share. County Natwest was expecting 24 cents. For the year, the company said it will earn less than 95 cents a share. The consensus on the Street had been for $1. The stock had been doing well prior to Thursday's bashing. It had broken out of a basing area at 24 four weeks ago. Lands' End Inc., a catalog retailer of clothes, slid 55/8 to 241/4 on 12 times average daily volume. It reported flat earnings for the third quarter of 31 cents a share. That was below Street consensus estimates of 39 cents a share. The stock has a large short position outstanding. Gap Inc. jumped 21/2 to 333/4. The retailer of casual clothes re- ported a 14% decline in fiscal third- quarter earnings to 43 cents a share. Analyst Dorothy Lakner of Oppenheimer & Co. said the results, although down, were better than the 40 cents expect- ed by the Street. Lakner said Gap showed good expense controls in the quarter. But she said the company is cautious about Christmas and has been feeling price sensitivity. She is estimat- ing flat earnings for the fourth quarter. Georgia Pacific Corp. shot ahead 21/2 to 58. The paper stock is a cyclical play. This year analysts expect a breakeven or slight profit but next year a profit of $2.50 a share. The stock has been trading between 50 and 60 the past four months. Supermarket firm Vons Cos. tacked on 1 to 241/8 on a 21% rise in third-quarter operating earnings. Reebok International Ltd.- raced ahead 11/8 to 311/2. It will receive $1 million from L.A. Gear Inc. from a lawsuit. L.A. Gear was up 1/8 to 113/8. This article is copyright 1992 Investors Business Daily. Redis- tribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM