CORRECTED)-Wall St moves up cautiously
In August 5 NEW YORK story headlined "Wall St moves up cautiously at midday after swoon," please read in last paragraph ...dropping 2-3/16 to 31-5/16..., instead of ...dropping 2-6/15... (corrects figure).
In same paragraph, please read ...CBS reported a net profit of $0.01 per share..., instead of ...CBS reported a net loss of $0.02 a diluted share... (corrects earnings).
A corrected repetition follows:
By Marjorie Olster
NEW YORK, Aug 5 (Reuters) - Wall Street stocks made a feeble recovery, taking cautious steps higher at midday Wednesday amid lingering doubts about whether the market had reached a near-term floor.
The Dow industrials slumped 3.4 percent Tuesday in what many analysts saw as a catch-up to the broader market, where many stocks were already down sharply from their 52-week highs. After Tuesday's 299-point drop, the Dow was up 42 points at midday Wednesday.
But in the broader market, breadth on the New York Stock Exchange was negative, with declines outpacing advances.
Bullish comments from several influential Wall Street strategists encouraged bargain-hunters to nibble on cheaper stocks.
But true to the recent pattern of the market, investors' appetites were focused on large-capitalization stocks that offer liquidity and reliable earnings.
"Money is going to keep going to the better names. They are producing earnings growth," said Marshall Acuff, portfolio strategist at Salomon Smith Barney.
But Acuff called the negative breadth "worrisome," saying, "The advance-decline shows the market is very narrow."
That narrowness -- the divergence between smaller stocks and big names that pushed major indices to record highs -- worried technical analysts for some time before Tuesday's sell-off.
"I would rather see more breadth. I can't get excited about the market holding its gains," Acuff said.
Scott Bleier (corrects surname), Prime Charter Ltd.'s chief investment strategist, said the correction has not run its course yet.
"The buying is definitely concentrated in the usual suspects -- Cisco <CSCO.O>, Lucent <LU.N>, Intel <INTC.O>, Microsoft <MSFT.O> and Dell <DELL.O>," he said.
"Until they break those stocks to their mid-June lows, I don't think the sell-off is over," he said. "We are falling back into the same pattern. That is why the correction is not over."
Acuff said the underlying factors that led to the recent downturn have not changed -- the divergent conditions in the market, a decline in earnings expectations, the Asian economic situation, and the scandal in Washington.
"That is not going to cause the market to spin around on a dime and take off to 10,000. It's not going to 6,000, but it's not going to 10,000 or even 9,300 any time soon," he said.
At 1255 EDT/1655 GMT, the Dow was up 78 points, or 0.92 percent, at 8566. The Nasdaq was up 15 points to 1801. The S&P500 was up 11 points, or 1.06 percent, to 1083.
Declines led advancing issues 15 to 13 on the Big Board. The Russell 2000 smaller stocks index was down 0.46 point to 401.17.
Goldman Sachs strategist Abby Joseph Cohen said she still has confidence in the bull market. She told clients the sell-off is overdone and stocks have reached the bottom of their trading range.
Donaldson Lufkin and Jenrette's chief investment officer Thomas Galvin boosted stocks in his model portfolio.
Galvin raised his stock allocation to 75 percent from 65 percent and cut bonds to 20 percent from 30 percent.
"We are not trying to pick a market bottom here; but looking at underlying fundamentals, the trend on inflation and economic growth is moving in a positive direction," Galvin said. "The market multiples, at 22 times our 1998 estimate and about 20 times our 1999 estimate, are compelling."
Both AlliedSignal Inc. <ALD.N> and AMP Inc. <AMP.N> tumbled as investors took a second look at AlliedSignal's $9.8 billion hostile bid for AMP, announced Tuesday.
Many took quick profits on Tuesday's gains in the two stocks as potential difficulties associated with a hostile takeover surfaced. AlliedSignal dropped 3-8/16 to 36-9/16 and was the most active stock on the NYSE. AMP slipped four to 38-3/4.
Wall Street also got a closer look at second-quarter profits. Aetna Inc. <AET.N>, one of the biggest U.S. insurers, was rewarded after it said second-quarter profits had topped forecasts. Shares rallied nearly 9 percent, rising 6-1/16 to 71-3/16 at midday.
Cisco Systems Inc. <CSCO.O> also rose, up 3-5/16 in heavy trading after it said earnings slightly beat expectations. It also announced a three-for-two stock split.
But America Online Inc. <AOL.N> shares fell, despite rosy earnings of $0.23 a share, which beat expectations by $0.04. The shares slipped 15/16 to 110 at midday.
CBS Corp. <CBS.N> shares were crunched after its earnings disappointed investors. The shares fell 7 percent, dropping 2-3/16 (corrects figure) to 31-5/16. Despite growth in its radio and television stations, CBS reported a net profit of $0.01 per share (corrects earnings), falling short of Wall Street forecasts.
12:33 08-06-98
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