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 Thu, May 21 1992 Date: Thu, 21 May 92 05:20:57 EDT Message-ID: 05-21 0000 DECISIONLINE: Personal Investing USA TODAY Update May 21, 1992 Source: USA TODAY:Gannett National Information Network STOCKS PULL BACK A BIT: The Dow Jones industrial average made two runs at the 3,400 level Wednesday but was unable to maintain its gains, falling 4.15 to 3,393.84. The modest setback from this week's record highs came as interest rates went up. Broader indexes closed mixed. Losers edged gainers 881 to 821 on the New York Stock Exchange on volume of 199 million shares. NO MAJOR MOVE EXPECTED: Traders still are hopeful for another interest-rate cut by the Federal Reserve to stimulate the economy. "Thirty-four hundred seems to be a logical spot for resistance right now," says Daiwa Securities trader Ned Collins. "But the Fed probably won't do anything between now and the weekend. So I don't think you'll see the market do anything major for the rest of the week." OFFERING NOT AN END TO TROUBLES: General Motors' history making stock offering this week, while adding more than $2 billion to its coffers, hardly means the automaker's problems are mere memories. It is the largest offering ever by a U.S. corporation. "But it doesn't resolve the fundamental issues that GM is working to address," says Mike Mulvaney, analyst at debt-rating agency Moody's Investors Service. (For more, see special GM package below.) NEWS FROM HUMANA HURTS STOCK: Shares of health-care giant Humana fell 2 1:4 to $23, barely above its 52-week low, after the company said Wednesday that third-quarter earnings will be below expectations. Earnings for its quarter ending May 31 - traditionally Humana's strongest - are expected to be 48 cents to 50 cents a share. That's below expectations and the 64 cents it earned a year earlier. STRONG HAS NEW FUND: Strong Funds has launched Strong International Fund, managed by four Dillon Read stock managers in London. Each plans annual visits to 75 to 100 companies in Europe, the United Kingdom and Asia. Minimum initial investment is $1,000 or $250 for individual retirement accounts. Sales fee: 2% up front. For a prospectus, call 1-800-368-1030. FUNDS REOPEN TO INVESTORS: Charles Schwab customers can buy into Mutual Shares and Mutual Qualified funds, which have been closed to new investors for almost three years. Michael Price manages the two growth-and-income funds. For information, call 1-800-435-4000. GOLD, SILVER MIXED: Gold and silver prices were mixed Thursday. On the Commodity Exchange, gold bullion for current delivery ended at $338.00, up 20 cents. Republic National Bank said gold was unchanged at $337.50. Gold fell in Europe and Asia. On the Comex, silver bullion settled at $4.080, up from $4.079. In London the metal eased to $4.07 from $4.09. SPECIAL PACKAGE ON GM: SHARES DISTRIBUTED WORLDWIDE: GM's huge offering began Tuesday night, when GM officials and investment banks it hired to conduct the sale set a precise price - $39 a share. About 10 a.m. EDT Wednesday, investment banks worldwide, led by Morgan Stanley, started distributing 55 million shares to pre-arranged buyers, including insurance companies, mutual funds, pensions and a few individual investors. ANALYST SAYS AVOID GM FOR NOW: All told, the offering grossed $2.1 billion. Of that amount, $54 million went to investment banks that led the offering, leaving GM with cash proceeds of more than $2 billion. "There's still a lot of uncertainty" about the company, says John Hilton, analyst at Argus Research. Hilton thinks investors should avoid GM stock for now despite its attractive 4.1% dividend yield. OFFERING DILUTES EARNINGS: GM stock already has had a tremendous run-up - 35% this year. But that can't last forever, especially if the recovery falters. Indeed, GM has been stuck between $38 and $42 since mid-March. Also, the addition of so many shares will dilute the company's earnings. Most investors base investment decisions on earnings per share - more shares mean lower per-share profit. MONEY TO AID RESTRUCTURING: Still, proceeds from the offering are sorely needed, helping GM make up a $4.5 billion loss last year. The offering also will give GM money to continue its restructuring. It plans to cut 74,000 employees and close 21 factories by 1995. Analyst Arvid Jouppi says it's a good sign that the stock held its ground the day after the offering. "I think it'll prove a good investment," he says. (End of package.) DOW JONES OPENS ON DOWNSWING: The Dow Jones average of 30 industrials opens Thursday at 3393.84 after closing down 4.15 points Wednesday. The New York Stock Exchange composite opens at 228.94, down 0.38. The American Stock Exchange market value opens at 392.15, down 0.22. The NASDAQ OTC composite opens at 580.29, up 2.24. DOLLAR OPENS UP OVERSEAS: The dollar opens up on Thursday. It opens at 0.5472 British pounds, up from 0.5439; 5.3920 French francs, up from 5.3460; 1.6032 German marks, up from 1.5911; and 129.62 Japanese yen, up from 129.05. (As of 3 p.m. Wednesday. 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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