Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!news.media.mit.edu!americast.com!usa-post Newsgroups: usa-today.invest From: usa-post@AmeriCast.Com Organization: American Cybercasting Approved: usa-post@AmeriCast.com Subject: invest Wed, Mar 4 1992 Date: Wed, 4 Mar 92 05:50:52 EST Message-ID: 03-04 0000 DECISIONLINE: Personal Investing USA TODAY Update March 4, 1992 Source: USA TODAY:Gannett National Information Network APPARENT SELL SIGNAL FLASHING: Mutual-fund managers are apparently signaling the market is headed for a fall. The average stock fund was almost fully invested in the stock market in January with just 7.9% of its assets in money-market securities, meaning funds don't have much cash for buying more stocks. Historically, when stock funds have less than 8% of their assets in cash, it's time to sell. HOT IPOS WORRY ANALYSTS: Investors are snapping up initial public stock offerings as if they were lottery tickets. However, analysts worry that the appetite for new stocks spells trouble for the market. Tuesday, three more companies sold initial shares to the public, bringing to 87 the number of new stocks to hit the market raising $4.6 billion this year, vs. 11 stocks for $870 million the same time last year. (For more, see special IPOS package below.) STOCKS HIT NEW HIGH: Blue-chip stocks climbed to another record high Tuesday, bolstered by signs of an improving economy. The Dow Jones industrial average gained 14.98 points to 3290.25, eclipsing the previous 3283.32 record set last Wednesday. The Commerce Department said its index of leading indicators rose 0.9% in January. Also, the government reported January new-home sales surged 13%. ITT SELLING STAKE IN ALCATEL: ITT said Tuesday that it will sell its 30% stake in the French telecommunications giant Alcatel. Analysts praise the sale and say the $3.6 billion ITT will get in cash and stock is far above expectations. News of the deal pushed ITT stock to a 52-week high. It closed up 3 3:8 at $69 7:8. ITT has received criticism that it's a sluggish conglomerate with too many irons in diverse fires. BERTUCCI'S UP ON SPLIT: Bertucci's shares shot up 4 to $32 1:2 after the company became the latest to announce a stock split. A spate of companies - such as Disney, Merck and Coca-Cola - have announced stock splits recently, mainly to lower their share prices to make it easier for individual investors to buy. Bertucci's, which runs 27 Brick Oven Pizzeria restaurants in New England, plans a three-for-two split. ANALYST LIKES DRUG STOCKS: Respected drug analyst Ronald Nordmann of PaineWebber is recommending drug stocks even after scrapping his buy recommendation on Warner Lambert. He sees robust stock gains of about 30% in 12 months for drug stocks after a hefty 61% rise in 1991. Nordmann is backing off of Lambert because of its failure to win quick approval of a new version of its anti-cholesterol drug. BRISTOL MYERS A FAVORITE: Analyst Ronald Nordmann says his drug stock favorites will do fine even in a ho-hum economy. He reasons people still need medicine and with the USA having a record number of doctors - about 600,000 - even more prescriptions will be written. His top play: Bristol-Myers Squibb, $80 3:8. Other favorites: Merck & Co., 156 1:4; Pfizer, $75; and Syntex Corp., 49 1:2. GOLD LOWER, SILVER MIXED: Gold prices were mostly lower, and silver was mixed Tuesday. On the New York Commodity Exchange, gold bullion for current delivery settled at $350.40 a troy ounce, off $1. Republic National Bank said gold slid 95 cents an ounce to a late bid price of $350.35. On the Comex, silver bullion for current delivery settled at $4.101 a troy ounce, down from $4.114. But in London the metal rose. SPECIAL PACKAGE ON IPOS: HEART TECHNOLOGIES SURGES: Among Tuesday's offerings: Heart Technologies, which makes cardiovascular products, surged 43% to $25 3:4 after it went public at $18 a share. Health services provider Vitalink Pharmacy closed at $17 1:2, up 1:2. Houseware maker Toastmaster was unchanged at $15. Others are sure to follow. Some 140 companies plan to go public the next few months. 40 A MONTH A SIGN OF TROUBLE: Some analysts see the appetite for new stocks as a warning that the stock market is headed for a tumble. Standard & Poor's says that when new offerings hit 40 a month, it's time to worry. The average since October has been more than that. In February, there were 58. Historically, such spurts suggest a market correction within a year, says S&P analyst Mark Basham. UP TO 10% PULLBACK SEEN In 1987, heavy IPO activity in the spring presaged a crash in October. That's one reason S&P expects a 5% to 10% market pullback within months. Signs of weakness in new stocks already are cropping up. The 100 most recent IPO stocks, tracked by The IPO Reporter, a newsletter, have dipped recently. At the end of last week, 60% were trading above their initial price, compared with 76% a month ago. SOME SEE RISE AS POSITIVE SIGN: John Markese, director of research at the American Association of Individual Investors, says the recent activity "isn't pointing to a big crash." Rather, it points to a healthy market. Many of the companies going public now are not the no-revenue, product-in-development longshots typically associated with IPOs. A good number are established companies taken private in the 1980s. (End of package.) DOW JONES OPENS ON UPSWING: The Dow Jones average of 30 industrials opens Wednesday at 3290.25, after closing up 14.98 Tuesday. The New York Stock Exchange composite opens at 228.43, up 0.23. The American Stock Exchange market value opens at 415.49, down 1.30. The NASDAQ OTC composite opens at 634.25, down 1.22. DOLLAR OPENS MOSTLY UP: The dollar opens mixed on foreign markets Wednesday. It opens at 0.5755 British pounds, up from 0.5709; 5.5617 French francs, unchanged; 130.87 Japanese yen, up from 129.68; and 1.6580 German marks, up from 1.6430. (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