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 Tue, May 19 1992 Date: Tue, 19 May 92 05:21:11 EDT Message-ID: 05-19 0000 DECISIONLINE: Personal Investing USA TODAY Update May 19, 1992 Source: USA TODAY:Gannett National Information Network SIMILARITIES TO 1987 SEEN: Investors who remember the weeks leading up to the 1987 stock market crash may be growing a bit uneasy. This year's decline in the stocks of Gap, Limited and other specialty retailers mirrors the events leading up to the market's worst one-day crash ever. Specialty-retailer stocks started to slide in mid-August 1987. Ten days later, the Dow hit its peak and began to drop. (For more, see special Market package below.) STOCKS REBOUND: Stock prices rebounded from two days of losses Monday on hopes that the Federal Reserve will push interest rates lower and the economy will continue to strengthen. The Dow Jones average of 30 industrials, down 16.32 points last week, rose 22.94 points to 3,376.03. Analysts said the market benefited from recent reports pointing to a slow but steady recovery from the recession. FLORIDA BANKS TO MERGE: Shares of First Florida soared 13 7:8 to $45 3:8 Monday, after it and another of Florida's oldest banks, Barnett, said that they will merge in a stock swap valued at $885 million. Barnett shares fell 3 1:4 to $36. Barnett will pay nearly twice the value of all First Florida shares before Monday's runup and take a hefty charge against earnings later this year to pay for the costs of the deal. MCDONNELL SHARES NOSE DIVING: McDonnell Douglas stock sank 4 3:8 to $43 1:2 Monday after a report that a Taiwanese group, which had been planning to buy 40% of the company's commercial-aircraft operation, has offered instead simply to buy 20 large jets. McDonnell had been counting on the group's planned $2 billion investment to help fund the building of the MD-12, a double-deck jumbo jet that could seat more than 500. TOYS R US EARNINGS UP IN QTR.: Monday, Toys R Us posted first-quarter net income of $28.3 million, or 10 cents a share - up 26% from $22.4 million, or 8 cents a share, last year. The first quarter typically accounts for a small part of the year's revenue. Toys R Us, whose stock rose 1 3:8 to $32 3:4, does 50% of its business the fourth quarter. PaineWebber rates Toys R Us attractive. BROKERS AWAIT DECISION: Stockbrokers lined the halls of the Supreme Court Monday, awaiting a decision in a New Jersey case on whether cigarette pack warning labels should protect manufacturers from being sued by those who suffer smoking-related illnesses. Richard Daynard, who heads the Tobacco Products Liability Project, predicts a loss for cigarette makers could make stock prices dip by as much as 10%. RATES DOWN AT TREASURY AUCTION: The Treasury Department sold $11.6 billion in three-month bills at an average discount rate of 3.61%, down from 3.64% last week. It also sold $11.6 billion in six-month bills at an average discount rate of 3.71%, down from 3.74% last week and the lowest rate since February 1972. SHEARSON TO PAY FINE: Shearson Lehman Brothers will pay a $500,000 fine and Shearson trader Peter DaPuzzo will be suspended for four months and pay a $100,000 fine for allegedly manipulating the stock price of ConAgra, the Associated Press reports. The New York Stock Exchange has been investigating whether DaPuzzo ordered an improper trade to boost the chances of a November 1990 stock offering. GOLD MOSTLY DOWN: Gold prices were mostly lower Monday. On the Commodity Exchange, gold bullion for current delivery settled at $338.90, up 20 cents. Republic National Bank said gold slipped 10 cents to $338.40. Gold also fell in London and Zurich. On the Comex, silver bullion settled at $4.087, up from $4.086. In London, the metal fell to $4.09 from $4.12. SPECIAL PACKAGE ON MARKET: SIMILARITIES ARE STRIKING: In October 1987, after dropping for a month, the market had its worst one-day crash ever. Total damage: The Dow fell 984 points, 36%, in two months. In 1987, Gap fell from an Aug. 12 peak of $19 (adjusting for stock splits since then) to a low of $4 1:8 Dec. 4 - a 79% plunge. By comparison, from this year's Jan. 6 peak of $59 3:8, Gap has plunged 41% to $34 7:8 Monday. MARKET NOT FOLLOWING RETAILERS: Limited dropped 69% from an Aug. 11, 1987, peak of $26 to $8 Dec. 3. The problem: Disappointing revenue and earnings reports. This year, Limited has dropped 37% from $32 7:8 Feb. 5 to $20 3:4. The problem: Worries about earnings growth. So far this year, market averages haven't followed the retailers' plunge. The Dow Jones industrial average is up 7% for the year. BULLS SAY CONDITIONS DIFFERENT: Bullish market watchers say it's a leap in logic to say that because Gap and Limited are falling, the stock market rally is about to end. After all, they argue, conditions are different now than in 1987. The economy is headed out of recession, not late in an expansion. Interest rates are falling, not headed up as they were in 1987. SOME SEE TOUGH GOING: For some, though, the troubles of Gap and Limited confirm that the stock market is in for a rough time. Says Bob James, money manager at Timing Research and Management: "We know there is a correction coming. Whether it will be large or small is the only question." (End of package.) DOW JONES OPENS ON UPSWING: The Dow Jones average of 30 industrials opens Tuesday at 3376.03 after closing up 22.94 points Monday. The New York Stock Exchange composite opens at 227.59, up 1.28. The American Stock Exchange market value opens at 391.52, up 1.15. The NASDAQ OTC composite opens at 576.54, up 2.10. DOLLAR OPENS DOWN OVERSEAS: The dollar opens down on Tuesday. It opens at 0.5451 British pounds, down from 0.5488; 5.3575 French francs, down from 5.4040; 1.5958 German marks, down from 1.6100; and 128.75 Japanese yen, down from 129.82. (As of 3 p.m. Monday. 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. 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