Tuesday: Dow Keeps Climbing, but Nasdaq Takes a Breather

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By John J. Edwards III
Staff Reporter

Another record high! Well, sort of.

The

Dow Jones Industrial Average

raggedly lurched all over the charts today, with a plus-or-minus finish in doubt until the very last minutes of trading. The blue-chip measure ended with a gain of 10.83 to 7225.32, but the widespread excitement that attended

yesterday's record-setting run was absent.

The technology blast, for one thing, took a breather. The

Nasdaq Composite Index

slipped 10.95 to 1328.29 after rocketing more than 67 points in the previous two sessions. The small-cap

Russell 2000

edged down 0.71 to 361.72.

Big-caps outside the Dow were nothing to sing about either. The broad

S&P 500

was off 2.53 to 827.76.

New York Stock Exchange

volume was huge at 607.5 million shares, but breadth was just barely negative at 1,260 advancers to 1,265 decliners. On the Nasdaq, 754.6 million shares changed hands and advancers beat decliners by 2,192 to 2,088.

Bonds were tepidly better, with the yield on the bellwether 30-year Treasury slightly down to 6.88%.

Michael Metz, chief investment strategist at

Oppenheimer

, said the recent upward explosion in stocks looked specious to his bearish eyes. "It is overdone," he said. "It doesn't mean it won't get more overdone before we're done."

Metz said he thinks the momentum in earnings is petering out, meaning gains of no more than 5% to 6% by year's end. And the dollar is unlikely to head any higher, which should be negative for the debt market, he said. He advises a heavy weighting in cash.

More sanguine is Michael Moe, head of emerging growth at

Montgomery

. He noted that Montgomery's index of 500 top growth companies, battered down more than 25% since its Jan. 31 peak, has shot up 15% in the last seven days. "It's been unprecedented," he said.

Moe said the planned capital-gains tax cut agreed to by

Congress

and

President Clinton

should be a major positive for growth companies, just as the 1978 reduction was. Among his favored industries are enterprise software, discount retail, physician management, restaurants and education. Metz, by contrast, thinks investors who must be in stocks should look at basic-materials companies.

Cisco

(CSCO) - Get Report

dropped 7/8 to 57 3/4 ahead of its post-close earnings report, which came out at 52 cents per share. That's in line with the

First Call

consensus estimate, but short of more bullish forecasts from

Merrill Lynch

and others. Cisco earned 37 cents per share in the year-earlier quarter.

Quiet telecommunications giant

GTE

(GTE) - Get Report

made a little noise, announcing that it will buy Internet service provider

BBN

(BBN) - Get Report

for $29 per share, or about $616 million. GTE also said it's entering into a strategic alliance with Cisco to develop enhanced data and Internet services. But the company added that its earnings-per-share growth for 1997 would be flat to slightly positive. It lost 2 1/8 to 45 1/4. BBN surged 6 1/4 to 28 7/8.

"We're firing a lot of people, sure -- but not

that

many!" That was the gist of the response from pending merger partners

Bell Atlantic

(BEL)

and

Nynex

(NYN)

to a

Wall Street Journal

report that they plan to ax 10,000 workers from the combined firm over five years. The companies maintain that they will cut 3,000 jobs over three years. Nynex inched up 1/8 to 52 3/4 and Bell Atlantic was unchanged at 69 1/8.

Shoe company

Nine West

(NIN)

went more than Seven South, plunging 7 1/8 to a 52-week low of 32 1/2 before being halted. The company said it is under investigation by the

Securities and Exchange Commission

over its revenue recognition policies and practices. Nine West closed at 45 3/4 April 10, the day the SEC entered its formal order of investigation into the company.

Tobacco companies gave up some of the bounce they enjoyed after yesterday's

RJR Nabisco

(RN)

court victory. RJR lost 2 3/8 to 30 1/4,

Philip Morris

(MO) - Get Report

fell 2 3/8 to 41 3/4 and the

American Stock Exchange Tobacco Index

, which includes those stocks and seven others, slipped 6.87 to 292.59.

Rah, rah, sis-boom-bah! Or something like that. Sporting goods maker

Riddell

(RIDL)

inked a definitive pact to buy

Varsity Spirit

(VARS)

for $18.90 per share, or about $91 million. Varsity Spirit, which makes cheerleading and dance gear and is the nation's largest operator of cheerleading and dance camps, somersaulted up 3 3/4 to a 52-week high of 18 1/2. Riddell added 3/8 to 4 3/8.

BTG

(BTGI)

got chopped 5 1/2 to 9 13/16 after reporting a fourth-quarter loss of 5 cents per share. The company earned 11 cents a year earlier, and First Call expected earnings of 15 cents in the most recent quarter.

Computer Sciences

(CSC)

jumped 4 1/2 to 72 3/8 after reporting fourth-quarter earnings of 97 cents per share, 2 cents better than the First Call estimate and far ahead of the restated year-ago 18 cents.

SoundView Financial Group

initiated coverage of Computer Sciences at buy.

America Online

(AOL)

shed 2 1/2 to 49 despite yesterday's strong upside earnings surprise. The company had been expected to report a loss but earned 2 cents per share.

Fila

(FLH)

and

Converse

(CVE) - Get Report

also lost ground today, but

Nike

(NKE) - Get Report

continued to move higher.

Up-and-coming long-distance company

LCI International

(LCI) - Get Report

got a boost from

Prudential

, which upgraded the stock to buy from hold. LCI gained 1 1/4 to 19 3/4.

NCI Building

(BLDG)

crumbled 5 to 26 1/8 after saying it expects its second-quarter earnings to fall short of First Call's estimate, 74 cents per share. But the company added that it expects to earn $3.50 for the full year, which would beat the First Call view by 2 cents.

Oxford Health Plans

(OXHP)

reported first-quarter earnings of 42 cents per share, 2 cents ahead of the First Call expectation and up from the year-ago 25 cents. It moved up 2 3/8 to 66 7/8.

Duramed Pharmaceuticals

(DRMD)

and

Barr Laboratories

(BRL)

extended the slide caused by the

Food and Drug Administration's

denial yesterday of their applications to market generic versions of an estrogen-replacement drug. Duramed bled 5 1/2 to 5 1/4 and Barr fell 2 1/2 to 40 3/4.

Toronto-listed

Norcen

agreed to offer US$40 per share, or $303 million, for 97.5% of

Basic Petroleum International

(BPILF)

. Basic leapt 5 5/8 to 39 3/8.

The hapless but widely, um, remembered

Boston Celtics

(BOS) - Get Report

lured former

New York Knicks

coach

Rick Pitino

away from the

University of Kentucky

with a seven-year, $70 million deal. The Celtics traded at a 52-week high of 28 7/8 intraday before finishing at 27 1/4, down 7/8.

Cameron Ashley Building Products

(CABP)

declined 1 3/4 to 12 1/4 after

Robinson-Humphrey

downgraded the stock to near-term market perform from buy, maintaining a long-term buy.

Excel Communications

(ECI)

reportedly refused to comment on its unusual stock activity, despite an NYSE request. The stock today rose 1 3/4 to 18 5/8, having ascended steadily from a close of 12 3/8 April 24.

Finally, a fond farewell to

Murray Kempton

, the finest and most inspiring journalist of his generation.