NEW YORK (CNNfn) - A late wave of buying helped push stocks on Wall Street sharply higher Tuesday, as investors focused on rallying drug shares, throwing aside a cautious reception to a slew of major earnings reports.
News of transatlantic merger talks between Britain's SmithKline Beecham and American Home Products helped lift the rest of the pharmaceutical sector and most of Wall Street followed suit. Mixed earnings reports from several banking and technology companies kept a lid on the market through most of the day, but gave in to pressure from the bulls in the last hour of trading.
Shortly before 3:00 p.m., the Dow Jones industrial average was up 77.72 points at 7,831.27. On the New York Stock Exchange, advances led declines 1,844 to 1,073 as 488 million shares changed hands.
Broader markets also advanced, with the Nasdaq Composite surging 21.23 to 1,584.11 and the S&P 500 index up 12.24 to 973.75.
Bonds run out of steam
Bonds fell in afternoon trading, pressured by the stock market's late rally. But the absence of any significant economic data releases kept the market subdued. The price of the benchmark 30-year Treasury bond fell 4/32 for a rise in its yield to 5.81 percent.
The dollar also hovered in a narrow range, making small advances against the German mark but losing slightly against the Japanese yen.
Earnings rule the day
In stocks, the outpouring of earnings releases from major companies prompted market participants to dub the day "Super Tuesday."
Financial services companies started the earnings avalanche, with Citicorp (CCI) reporting fourth-quarter profits of $2.20 per diluted share, up from $1.97 a year earlier, and above Wall Street expectations for $2.18 a share. The stock fell 5/16 to 119-9/16 despite the better-than-expected results. Citicorp's pre-tax results were cut by $250 million as a result of the Asian financial crisis.
Dow component J.P. Morgan (JPM) also came in with fourth-quarter results, but its profit fell to $1.33 a share from $2.04 a year earlier. The results were also below market expectations for $1.57 a share. The stock lost 3-1/2 to 103-3/8 following the disappointing earnings.
And Chase Manhattan (CMB) reported fourth-quarter earnings of $1.89 per diluted share, beating year-earlier results by a penny, and meeting Wall Street expectations. Chase's shares rose 1/2 to 106 on the news.
All three banking powerhouses said the Asian jitters cut into the latest quarter's results. But analysts said the impact of the Far Eastern turmoil was smaller than many had feared.
"Right now it looks like the impact of Asia will be modest," said Henry Dickson, banking analyst at Salomon Smith Barney.
Other financial services companies that reported earnings Tuesday include Merrill Lynch (MER), whose fourth-quarter profits rose to $1.17 a share from $1.14 a share a year earlier. Another securities and brokerage firm, PaineWebber (PWJ) said its fourth-quarter earnings rose to 68 cents per diluted share from 57 cents a share in the fourth quarter of 1996. And Bank of New York (BK) reported earnings of 75 cents per diluted share, up from 60 cents a year earlier.
Technology companies, the market's most volatile performers, also had some earnings of their own, with Lucent Technologies (LU) reporting fiscal first-quarter profits of $1.124 billion, or $1.72 per diluted share, up 31 percent from a year earlier. Shares of Lucent jumped 5-5/16 to 80-3/4.
In other technology news, the New York Times reported that industry giants Compaq Computer (CPQ), Intel Corp. (INTC) and Microsoft (MSFT) have joined forces with the country's largest local phone companies to provide faster Internet access through regular phone lines. Shares of Compaq fell 1/8 to 59, Intel was up 1-3/16 to 76, and Microsoft rose 2 to 137-1/4. Separately, Merrill Lynch lowered its 1999 earnings estimates for Microsoft to $4.30 per share from $4.55.
And in more technology earnings, IBM (IBM), one of the bluest of blue chips, is expected to report fourth-quarter profits of $2.15 a share after the closing bell. The stock was up 2-13/16 at 107-13/16.
Tuesday also brought a hefty dose of merger news. Leading the pack was news that British pharmaceutical group SmithKline Beecham is in talks to buy American Home Products (AHP). American Home Products shares surged 11-13/16, or more than 14 percent, to 92-1/2 on the news, pulling other drug stocks with them. Dow component Merck (MRK) was up 5-1/8 to 114-7/8, Eli Lilly (LLY) gained 2-13/16 to 69-13/16, Pfizer (PFE) rose 2-3/4 to 79-3/4, and Warner-Lambert (WLA) soared 9-1/8 to 138-1/4.
Separately, Pfizer reported fourth-quarter earnings of 43 cents a share, a 10 percent increase from results in the fourth quarter of 1996. The profit was in line with analysts' expectations.
And Johnson & Johnson (JNJ), the world's largest maker of health-care products, said fourth-quarter earnings per share rose 12 percent to 47 cents from 42 cents a year earlier. The results were in line with market expectations and the stock rose 7/8 to 68-5/8.
Also in the day's deal news, Hicks Muse Tate & Furst will join with Kohlberg Kravis Roberts & Co. to acquire Regal Cinemas (REGL) for $1.5 billion, plus the assumption of $290 million in debt. Shares of Regal lost 3/4 to 29-1/2 after rising sharply Friday.
And two insurance companies are about to join operations in a stock deal valued at $3.5 billion. The marriage between St. Paul Companies (SPC) and USF&G Corp. (FG) will create the eighth-largest property and casualty insurer in the United States. Shares of St. Paul rose 6-5/8 to 84-3/4 and the stock of USF&G was up 2 to 23-7/16.
Finally, shares of troubled home health care firm Apria (AHG) continued their tumble, losing 2-5/15, or more than 20 percent, to 9-3/16 after the company got rid of several top executives and said it expects to report a 1997 loss. 
--by staff writer Malina Poshtova Zang
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