NEW YORK (CNN/Money) -
Stocks in restaurant chains such as McDonald's Corp. and Outback Steakhouse Inc. recovered some lost ground Friday, despite the quarantine of a second farm in Washington state linked to the first case of mad cow disease in the United States.
McDonald's (MCD: Research, Estimates) shares rose 13 cents to close at $24.09. Steakhouse chain Rare Hospitality International Inc. (RARE: Research, Estimates) closed up 31 cents to $24. Outback Steakhouse (OSI: Research, Estimates) chain shares rose 32 cents to end the day at $42.72.
"People are thinking maybe there was an overreaction to the mad cow issue, and there is a little bargain hunting going on," Edgar Peters, chief investment officer at PanAgora Asset Management, told Reuters.
The discovery in the United States of the disease, known as bovine spongiform encephalopathy, was inevitable, said Mike Smith, an analyst with Oppenheimer & Co. in Kansas City. But pressure on shares of the big restaurant chains will continue to ease if the Washington state discovery turns out to be a rare case, Smith predicted.
"As long as it remains an exception and doesn't become a rule, I don't think the public's demand for beef is going to change a great deal," Smith said.
The U.S. Department of Agriculture said Friday it quarantined a second herd in Washington state as part of its investigation and said it could take weeks or months to identify the birth herd of the infected Holstein. The Veterinary Laboratories Agency in Weybridge, England, confirmed the preliminary USDA diagnosis, and the department said Friday the British lab would perform a further test on another sample from the cow's brain.
McDonald's had driven the Dow lower with a decline of more than 5 percent Wednesday, although the company said its supply chain was not linked to the mad cow case near Mabton, Washington.
Shares in Tyson Foods Inc. (TSN: Research, Estimates), the beef, chicken and pork producer, sank 31 cents to $12.59.
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