Wednesday: Greenspan Rally Continues but Slows

By John J. Edwards III
Staff Reporter

The Great

Greenspan's

magic wand sputtered a little but had some sparkly dust left for the markets, as the major indices extended yesterday's upward blast.

The

Federal Reserve

chairman today wrapped up his

Humphrey-Hawkins

testimony to

Congress

without incident, allowing the markets to find their own way. That way was higher, but the

Dow Jones Industrial Average

appeared to encounter what the technical analysts call key resistance at 8100. It rose 26.71 to 8088.36.

The

S&P 500

gained 2.58 to 936.56 -- just 0.03 short of its July 16 record -- and the tech-driven

Nasdaq Composite Index

moved up 3.79 to 1567.65. The bond market, which provided much of yesterday's forward momentum, was a nonfactor for equities today. The yield on the bellwether 30-year Treasury bond headed up to 6.43%. (For more on bonds, see today's

Key Numbers.)

Stock-market volume picked up and breadth remained positive, though not as wildly so as yesterday.

New York Stock Exchange

advancers bested decliners by 1,718 to 1,144 on volume of 620.9 million shares. On the Nasdaq, 2,229 advancers led 2,110 decliners on 694.8 million shares.

"One cannot help but express awe and amazement at the market's performance," said Alan Ackerman, market strategist at

Fahnestock

. "We're looking at a sprinter that's running a mile at a sprinter's pace. Sooner or later there's going to be a sense of exhaustion."

To deal with that poop-out before it comes, Ackerman said he's looking for stocks with price-to-earnings ratios below the general market's level of about 20. "I find the combination of safety and growth in stocks like

BellSouth

(BLS)

, which is broadening its telecommunications operations into growth areas such as Latin and South America," Ackerman said. BellSouth was off 5/8 to 47 5/16 today and has a P/E of 18.

Wednesday's market action

(earnings estimates from

First Call

):

Boeing

(BA) - Get Report

and

McDonnell Douglas

(MD) - Get Report

jetted higher after the

European Union

reversed course and endorsed their pending merger. McBoeing had to make certain concessions, including a 10-year moratorium on new exclusive supply contracts. Boeing gained 2 11/16 to 59 1/16 and McDonnell Douglas gained 4 11/16 to 76 7/16.

Bay Networks

blasted up 2 1/2 to a 52-week high of 31 9/16 on the strength of its fourth-quarter results, reported late

yesterday. The company beat expectations by 3 cents.

Goldman Sachs

upgraded Bay to trading buy from market perform and

Lehman Brothers

upgraded it to outperform from neutral, placing a 12-month price target of 40 on the stock. Bay's outperformance led the networking sector higher, with

Cisco

(CSCO) - Get Report

up 1 9/16 to an all-time high of 80 3/8,

3Com

(COMS)

up 1 7/16 to 57 13/16 and

Newbridge Networks

(NN)

up 5/16 to 51 1/16.

Ascend

(ASND) - Get Report

, however, dimmed 1 1/8 to 51 3/8

Netscape

(NSCP)

dropped 4 7/8 to 39 5/8 after

Hambrecht & Quist

lowered its earnings estimates on the company. The firm cut its 1997 outlook to 47 cents per share from 52 cents but upped its revenue expectation to $560 million from $548 million, saying it expects Netscape to reinvest more. Netscape late yesterday reported second-quarter earnings in line with expectations.

Spine-Tech

(SPYN)

ascended 8 3/4 to an all-time high of 56 after

Robertson Stephens

upped earnings estimates on the company. The company late yesterday reported second-quarter earnings of 25 cents per share, a dime better than the eight-analyst outlook and up from the year-earlier loss of 6 cents. The company also said the

Food and Drug Administration

approved a Spine-Tech procedure for treating lower back pain caused by degenerative disc disease.

As expected,

Time Warner

(TWX)

agreed to carry

News Corp.'s

(NWS) - Get Report

climbed 1 7/16 to an all-time high of 67 5/8 after reporting second-quarter earnings of $1.01 per share, in line with the 16-analyst estimate and up from the year-ago 89 cents.

Eli Lilly

(LLY) - Get Report

surged 2 5/16 to 115 15/16 after reporting second-quarter operating earnings of 76 cents per share, in line with the 29-analyst view and up from the year-ago 63 cents.

US Airways

(U) - Get Report

descended 3/4 to 38 1/8 despite reporting second-quarter operating earnings of $2.18 per share, 2 cents better than the 12-analyst forecast and up from the year-earlier $1.91.

United Technologies

slid 3/8 to 85 7/8 despite reporting second-quarter earnings of $1.17 per share, 3 cents ahead of the 15-analyst estimate and up from the year-ago 98 cents.

3M

(MMM) - Get Report

lost 1 7/8 to 98 7/16 after reporting second-quarter earnings of $1.01 per share, 2 cents shy of the 11-analyst view but up from the year-ago 91 cents.

Oil companies finished mixed to lower on earnings reports.

Chevron

(CHV)

slipped 13/16 to 76 13/16 despite reporting second-quarter earnings of $1.26 per share, a big 16 cents better than the 24-analyst expectation but down from the year-earlier $1.34.

Mobil

(MOB)

fell 2 to 73 1/2 despite reporting second-quarter operating earnings of $1.09 per share, 8 cents ahead of the 23-analyst view and up from the year-ago $1.02.

Unocal

(UCL)

lost 7/16 to 38 1/2 after reporting second-quarter earnings from continuing operations of 39 cents per share, 6 cents short of the 24-analyst estimate and down from the year-ago 60 cents.

USX-Marathon Group

(MRO) - Get Report

added 1/4 to 30 1/2 after reporting second-quarter earnings of 55 cents per share, 7 cents better than the 19-analyst outlook but down from the year-ago 59 cents.

Marathon's sister company

USX-U.S. Steel Group

(X) - Get Report

rose 1 5/16 to 36 1/16 after reporting second-quarter operating earnings of $1.26 per share, a dime better than the 16-analyst expectation and up from the year-ago 35 cents. Elsewhere in the steel business,

Nucor

(NUE) - Get Report

gave up 1/4 to 57 3/4 after reporting second-quarter earnings of 83 cents per share, in line with the 14-analyst forecast and up from the year-ago 63 cents.

Qualcomm

(QCOM) - Get Report

declined 3 3/4 to 47 7/8 after

Bear Stearns

downgraded the stock to attractive from buy. Qualcomm late yesterday reported third-quarter operating earnings of 35 cents per share, 3 cents better than the 14-analyst estimate and up from just 2 cents a year earlier.

EMC

(EMC)

fell 2 1/16 to 48 15/16 after reporting late yesterday second-quarter earnings of 50 cents per share, 2 cents better than the 10-analyst consensus and up from the year-ago 36 cents.

Morgan Stanley

increased its six- to 12-month price target to 60 from 55.

Liz Claiborne

(LIZ)

was off 9/16 to 48 3/4 after reporting second-quarter earnings of 41 cents per share, 4 cents higher than the 13-analyst outlook and up from the year-ago 31 cents.

Samsonite

(SAMC)

skidded 2 3/8 to 48 7/16 after Morgan Stanley downgraded the stock to neutral from outperform.

Great Lakes Chemical

(GLK)

lost 3/16 to 47 13/16 after reporting second-quarter earnings of $1.04 per share, in line with the 13-analyst estimate but down from the year-ago $1.20.