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Blue chips take a pause
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April 22, 1998: 11:50 a.m. ET
Stocks trade mixed amid possible new banking merger news, more earnings
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NEW YORK (CNNfn) - U.S. stocks were mixed at midday Wednesday, with blue chips bouncing around in a narrow range while broader markets posted modest gains as investors digested news of more earnings and a possible new merger in the banking industry.
Shortly before 11:30 a.m., the Dow Jones industrial average was off 9,22 points to 9,175.72. On the New York Stock Exchange, trading volume reached 255 million shares, with declines leading advances 1,358 to 1,291.
Other markets rose slightly, with the technology-heavy Nasdaq Composite gaining 5.96 to 1,909.83 and the broader S&P 500 index up 2.76 to 1,129.10, both trading in record territory.
Despite pressure from heavy corporate debt issuance and speculation the Federal Reserve may raise interest rates to slow down the economy, bonds traded higher as investors returned to the market after two days of selling. The benchmark 30-year Treasury bond rose 5/32 of a point in price, for a yield of 255 percent.
The dollar was mixed, rising against the mark after German central bankers threw cold water on market speculation that interest rates there were headed higher. Comments by a key Japanese official that Tokyo was ready to sell dollars in support of the yen weighed on the greenback against the Japanese currency.
Mergers and earnings feed buying frenzy
News of a possible new merger in the consolidation-crazed banking industry, coming on top of a steady stream of first-quarter earnings reports, gave more than enough fodder for enthusiastic investors to trade on.
In what could be the latest deal to hit the banking industry, the Bank of New York (BK) early Wednesday launched an uninvited takeover bid for Mellon Bank (MEL), offering to join forces in a $24 billion stock swap. Shares of Mellon, which was quick to rebuff the offer, surged 7-13/16, or more than 11 percent, to 77-11/16, while the Bank of New York's stock dropped 1-1/16 to 62-11/16 on the news.
Shares of other banks followed on the upside as speculation mounted that more deals may be in the works. Chase Manhattan (CMB), which has been rumored to be on the lookout for a partner, gained 1-1/16 to 140-3/16. Dow component J.P. Morgan (JPM), said to be a takeover target, rose 1-15/16 to 142.
Wall Street also received a steady dose of earnings news, most of which caused investors to buy even more shares.
Topping gainers in that sector, shares of Lucent Technologies (LU) jumped 2-3/16 to 76-7/16 after the telecommunications equipment maker reported a fiscal second-quarter profit of 14 cents a share, excluding a charge, up from 5 cents a year earlier.
And shares of Microsoft (MSFT) gained 3 to 98 as investors braced for its earnings report due after the closing bell.
Warner-Lambert (WLA) gained 11-1/8 to 190-3/16 -- and led net gainers on the Big Board -- after the drug giant's chief executive told analysts Tuesday that first-quarter earnings would rise 36 percent to 99 cents a share. Following the statement, Merrill Lynch and BT Alex. Brown upgraded the stock.
But Xerox Corp. (XRX) shed 3-5/8 to 107-7/8 after the maker of office equipment reported lower first-quarter earnings.
Finally, the stock of Ikon Office Solutions (IKN) tumbled 9-1/16, or more than 26 percent, to 25-9/16 after its fiscal second-quarter earnings fell short of expectations. Following the disappointing report, Prudential Securities and Goldman Sachs downgraded the office equipment provider's shares. 
--by staff writer Malina Poshtova Zang
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