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Year-end rally runs out
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December 31, 1997: 4:58 p.m. ET
Dow industrials still register third straight year of 20%-plus returns
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NEW YORK (CNNfn) - The year-end rally in U.S. stocks finally ran its course on the last trading day of the year, but not before helping Wall Street rewrite the history books.
By the ringing of the closing bell(1.86M QuickTime), the Dow Jones industrial average Wednesday closed with a loss of 7.72 points to a level of 7,908.25.
But, thanks largely to the 3 percent rally Monday and Tuesday, the blue-chip index has surged 1,459.98 points, or 22 percent, for the year. Prior to this year, the average had never in its 101-year history registered 20 percent-plus gains for three consecutive years.
And the broader markets showed more resilience Wednesday. The S&P 500 lost only 0.41 points to end the day at 970.43. For the year, the S&P gained 229.69 points, or 31 percent.
The Nasdaq composite index closed 5.32 points higher Wednesday at 1,570.35. For all of 1997, the index soared 279.32 points, or 22 percent.
For 1998, a changing environment
Because of the market's impressive gains, many portfolio managers have faced difficulties in trying to beat the so-called "indexed" funds in 1997. But at least one Wall Street veteran believes the environment will change.
"I would look at this transition to 1998 as … going to be back to fundamentals ... where real strong understanding of the companies in your portfolio and a research focus is what's going to make the difference with investors," said Jessica Bibliowicz, president of John Levin & Co., a New York City-based money management firm.
Wednesday's turnover was sluggish on the New York Stock Exchange as investors appeared more preoccupied with the Big Board's festivities than trading. Volume totaled 472 million shares.
By afternoon, the market's breadth turned decidedly positive, with advancing issues outpacing decliners, 1,820 to 1,091.
Transport index takes off
Transportation issues, once again, helped bolster the market's gains. The Dow Jones transport average soared 40.28 to 3,256.50. American Airlines' parent company, AMR Corp. (AMR), climbed 2-13/16 to 128-1/2 while UAL Corp. (UAL), the parent of United Airlines, flew 3/4 to 92-1/2.
However, Northwest Airlines told investors it plans to take a $9.5 million after-tax charge in the fourth quarter. The stock (NWAC) fell 7/8 to 47-7/8.
Among other notable issues, Russell Corp.'s shares (RML) were down 1-11/16 at 26-3/4 after the athletic apparel company said fourth-quarter earnings may be 50 to 60 percent below year-ago levels.
Shares of Paragon Trade Brands (PTB) slumped 7-1/2 to 12-3/4 after a court handed the diaper company a legal defeat in its patent dispute against Procter & Gamble (PG), which was down 3/8 at 80-3/8.
Some big winners, big losers
CMC Industries shares were reeling after the contract manufacturer of electronics equipment lost a major customer, Micron Electronics. The stock (CMCI) dropped 4-11/16 at 6-1/8.
CompUSA added to Tuesday's 3-5/16 point gain after the computer reseller confirmed same-store sales surged more than 8 percent for its fiscal second quarter. The stock (CPU) was up 2-9/16 at 32-3/16.
Fresh America, a distributor of perishable food items, expects fourth-quarter earnings to fall short of Wall Street's estimates, in part from a $650,000 restructuring charge. The stock (FRES) was down 5-1/8 at 19-1/4.
Elsewhere, the bond market, which closed early due to the New Year's holiday, was helped by economic reports indicating that the labor market weakened slightly. The 30-year Treasury bond ended up 21/32 to yield 5.92 percent.
-- by staff writer Robert Liu
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