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FOOL GLOBAL WIRE LEXINGTON, KY. (January 28) -- The economic indicator rumored to be Alan Greenspan's favorite inflation test -- the quarterly Employment Cost Report -- came in as expected this morning, showing only a 0.8% growth rate for the final three months of 1996. This puts the annual growth rate for 1996 at 2.9%, a number tame enough to cheer bond traders and stock investors immensely. Couple that with a spate of stronger-than-expected earnings reports from America's Blue Chips, and it's not hard to see why the stock market reversed the last four days of losses with a healthy rally of some 100 points early in the day. But late in the session, fear set in once more to snatch defeat out of the jaws of victory. Rumors flew around the Street. Some traders speculated that retail sales numbers for the previous week suggested a surge in the economy and the markets (bonds and stocks) gave back the early-day prize. Others reported seeing Fed Chairman Greenspan inking a deal with the devil and the Fox Network to sing the national anthem at next year's Super Bowl. Who knows why it fell? More relevant to our Foolish Four investing were the earnings reports by GENERAL MOTORS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GM)") else Response.Write("(NYSE: GM)") end if %> and MINNESOTA MINING & MANUFACTURING <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MMM)") else Response.Write("(NYSE: MMM)") end if %>. General Motors, despite the dramatic effects of its recent strikes, dropping operating net income some 50% from the previous year's levels, still managed to beat the revised Street estimates by six cents a share. But disappointment over the perception that GM's announced dividend hike and share buyback program were too small continued to weigh on the stock today, dropping it another point on the day. No such problems for 3M, though. The maker of Post-It Notes and other household names recorded earnings of 92 cents per share, beating estimates by 2 pennies. That represents an 18% jump in income over the previous year's fourth quarter. The stock rose 1.7% on the day. In other Dow stock news, IBM <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IBM)") else Response.Write("(NYSE: IBM)") end if %> rebounded on news that it will split its stock 2-for-1. DISNEY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DIS)") else Response.Write("(NYSE: DIS)") end if %> bounced after posting earnings better than estimates by 4 cents per share and boosting its relatively anemic quarterly dividend from 11 to 13.25 cents. MERCK & CO. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MRK)") else Response.Write("(NYSE: MRK)") end if %> and PROCTER & GAMBLE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PG)") else Response.Write("(NYSE: PG)") end if %> also posted strong earnings today. Procter & Gamble boosted earnings by 13% over last year's fiscal second quarter because of cost-cutting moves and cheaper prices on raw materials, while Merck rode strong pharmaceutical sales and a good managed-care scenario to a 21.6% gain in fourth-quarter net income. In my best Dick Vitale voice: "These are PTPers, babeeee! Prime-Time Performers! It's Earnings, babeeee!" |
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