Eight straight for Nasdaq
Stock Markets
July 15/97
Expectations of strong second-quarter earnings boosted the Nasdaq
composite index to its eighth consecutive record close. The TSE 300
outperformed the Dow in uneventful summer trading
By THE FINANCIAL POST
Computer-related shares rallied as investors bet that falling personal computer prices will cause
sales to surge later this year.
The rally sent the Nasdaq composite index surging 21.26 points, or 1.4%, to a record 1523.88.
The index has risen 24% this year.
The advance came one day before Intel Corp. - the world's largest semiconductor maker -
reports earnings for the three months ended June 30.
Santa Clara, Calif.-based Intel is expected to earn US$1.79 a share, according to the average
estimate of 30 analysts surveyed by IBES International Inc. It reported earnings of US$1.04
billion, (US$1.17 a share) on revenue of US$4.62 billion in the year-earlier quarter.
Intel shares (INTC/NASDAQ) rallied US$1 7/8 to US$78 3/4.
Analysts said recently announced plans by Compaq Computer Corp. and Hewlett-Packard Co.
to cut prices on some commercial personal computers by as much as 25% should drive consumers
and businesses to add new computers or replace existing machines that have less power, analysts
said.
"There's big expectation that sales will take off in the second half," said Brian Kramp, a computer
industry analyst at Meridian Investment Co.
Among the biggest gainers, Compaq (CPQ/NYSE) surged US$4 1/4 to US$128 1/4, Dell
Computer Corp. (DELL/NASDAQ) jumped US$4 7/8 to US$142 7/8 and Microsoft Corp.
(MSFT/NASDAQ) surged US$63 1/816 to US$13515 1/816.
Oracle Corp. (ORCL/Nasdaq) surged US$17 1/816 to US$53 3/4 and Netscape
Communications Corp. (NSCP/NASDAQ) jumped US$5 7/8 to US$44 3/4.
The Dow Jones industrial average lagged the Nasdaq's impressive advance. It rose just 1.16
points to 7922.98. Only two of the Dow's 30 stocks - International Business Machines Corp. and
Hewlett-Packard - are in the computer industry. IBM shares (IBM/NYSE) fell 7 1/816 to US$95
1/4 and Hewlett-Packard (HWP/NYSE) climbed US$3 7/8 to US$651 1/816.
Volume on the New York Stock Exchange was 489.7 million shares, down from 503.9 million
shares traded Friday.
The Standard & Poor's 500 composite index climbed 1.7 points, or 0.2%, to 918.38.
Toronto stocks rose to a third successive record close as industrial-product issues advanced on
anticipation of strong earnings growth in a climate of low interest rates.
The Toronto Stock Exchange 300 composite index rose 13.2 points, or 0.2%, to 6639.6. Volume
fell to 85.1 million shares, from 95 million shares traded Friday.
Interest rates are at their lowest in three decades and are expected to help lift corporate profits.
Northern Telecom Ltd. (NTL/TSE) rose $2 to $139 and Geac Computer Corp. (GAC/TSE)
climbed $7.50 to a new high of $55.
Last week, Geac reported its fiscal fourth-quarter profit more than doubled to 70› a share, up
from 31› in the year-earlier period.
Low interest rates also help banks, which perform best against a background of low rates and
stable prices. Royal Bank of Canada (RY/TSE), rose 40› to $66.40 and Canadian Imperial Bank
of Commerce (CM/TSE) gained 45› to $36.70.
Gold issues surrendered early gains as the price of bullion on the New York Mercantile Exchange
fell US$1.50 to US$320.10 an ounce.
Barrick Gold Corp. (ABX/TSE) tumbled 90› to $29.65 and Placer Dome Inc. (PDG/TSE)
slipped 90› to $20.30.
The TSE gold and precious minerals subindex, which accounts for 6.59% of the benchmark TSE
300, has fallen 31.8% so far this year.
The other major Canadian markets closed mixed. The Montreal Exchange market portfolio gained
7.76 points, or 0.2%, to 3359.2. The Vancouver Stock Exchange composite index lost 3.84
points, or 0.5%, to 808.34.
All but one of the major overseas markets closed higher.
London: British stocks jumped to a record as investors overlooked the strength of the pound,
which can hurt profits of British companies. The FT-SE 100 rose 57.9 points, or 1.2%, to 4857.4.
Frankfurt: German stocks rose, with the Dax index adding 83.22 points, or 2.1%, to 4124.19.
Tokyo: Japanese stocks surged as investors actively sought high-technology issues backed by firm
earnings. The 225-share Nikkei average closed at 20,228.72, up 353.23 points or 1.8%.
Hong Kong: Bank stocks led a broad rally, propelling the Hang Seng index to a record
15,370.94, up 145.65 points or 1%.
Sydney: Australian stocks fell. The all ordinaries index lost 26.1 points, or 1%, to 2673.
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