TAKING STOCK OF AN UP-DOWN YEAR.

Byline: Associated Press

It was a fitful year for the stock market, with triple-digit point moves in the Dow Jones industrial average becoming commonplace. Merger mania was back, with price tags for big companies in the tens of billions of dollars.

Labor had a big victory in the Teamsters strike against United Parcel Service. The tobacco industry agreed to a $368 billion settlement that would end its liability for smoking-related illnesses.

Well, so what? While big money and big deals flew around the business world in 1997, the rest of us kept on working, investing, supporting the economy, and, when needed, coping with disruptions like strikes.

Actually, the American public was the calming influence when market professionals were frantic, and they provided the foundation on which companies, including those cutting the multibillion-dollar megadeals, could build and expand.

A look at the top developments in business during 1997, and how they affected the average American:

In 1997, the economy took care of itself. Americans in general were working, feeling good about their pocketbooks, and the country's financial well-being was a non-issue.

The layoffs that started in the early 1990s were still happening, thousands of jobs were cut at high-profile companies: 10,000 at Eastman Kodak; 6,400 at Levi Strauss; 9,000 at Woolworth, which closed its five-and-dime stores. Hasbro, Kimberly-Clark and Fruit of the Loom were among others with big cuts.

But employers in general added more than 2 million jobs to non-farm payrolls. Unemployment was at a 24-year low of 4.6 percent at year's end, making it a job seeker's market. And so consumers, although they were cautious, could afford to be more confident about the economic outlook than they'd been in a generation.

``It's booming,'' said Frank Harrison, a reinsurance broker from Freehold, N.J., as he and his family visited Manhattan, N.Y., at Christmas. But, he said, ``people worry about the bubble bursting.''

Inflation through November was running at an annual rate of 1.8 percent. The combination of moderate economic growth and price stability meant the Federal Reserve was forced to raise interest rates just once, in late March. As Americans kept working and producing, a series of rate hikes that economists expected just never came to pass.

Even if Black Monday '97 and its 554-point drop in the Dow forced some baby boomers to rethink their dreams of an early retirement, there was little indication that individual investors panicked Oct. 27.

In fact, it seems some investors were licking their chops, as if they'd been waiting for another chance to ``buy the dip,'' picking up cheap stocks, as they'd done since the big stock market crash a decade earlier.

At Fidelity Investments, investors started adding money to Fidelity stock funds after the latest sell-off. At No. 2 Vanguard Group, buyers outnumbered the sellers.

But most conspicuous about Oct. 27 was what most investors did: nothing. Good listeners, most held fast to the buy-and-hold credo regularly espoused by Wall Street's finest - many of whom failed to heed their own advice that day.

The individual investor, whose calmness and fortitude helped the stock market recover from the 1987 crash and made the huge gains of the 1990s possible, supported the market once again.

Sheryl Frank, 31, had given birth to her first child in July, and opened a mutual fund account for the baby girl about a month before the market plunge.

``It did remind me that there's no guarantee with these types of investments,'' said Frank, a psychologist in Silver Spring, Md. ``But it didn't faze me because I kept in mind what my financial adviser said: `Just sit tight. Ups and downs will happen, but in the long run, things work out.' ''

Florence Gold, a 92-year-old who depends on investment income to cover the costs of living in a Teaneck, N.J., retirement community, said her biggest concern about the sell-off was whether her broker was having a hectic day.

``I didn't feel one bit threatened,'' Gold said.

Lynne Simmons has learned a lesson from the United Parcel Service strike, which had her worried that her specialty foods company might collapse because it couldn't ship to customers.

``I do not take anything for granted, now that I know what the effects (of the strike) are,'' said the owner of Marietta, Ga.-based Native South. ``I won't be Scarlett O'Hara and say `I'll worry about it tomorrow.' I'll worry about it today.''

Hers was one of thousands of businesses disrupted by the first nationwide work stoppage against the delivery giant, which lost loyal customers and $211 million after taxes.

UPS' loss was labor's gain. The strike galvanized worker support nationally, giving organized labor its biggest momentum in years. The Teamsters portrayed the strike as a battle against heavy use of part-time workers and to create more full-time opportunities.

They hope to use the success of their strike to help recruit new members. Ironically, though, the former UPS worker who led the strike, Teamsters President Ron Carey, was later unseated and prevented from running again because of corruption allegations.

The numbers were astounding. A company called WorldCom said it would pay $37 billion for MCI. First Union will buy fellow banker CoreStates for $16.1 billion. At times it seemed like we were back in the 1980s - there were hostile takeover offers and bidding wars for ITT and Great Western Financial.

For the most part, the public - whose hard work, vacations and purchases make a takeover target worth buying - paid little attention. Of course, shareholders in these companies - and that includes millions of individual mutual fund investors - made money off the deals. But unless a deal directly affected their lives, most Americans didn't notice, and probably didn't care, who owned the Discover card or Universal Studios.

An exception was the banking industry, where consolidatofion continued at a fierce clip this past year as big regional banks bought up other big regional banks and often closed branches or eliminated amenities and services.

Brandywine, Md., population 14,000, was ``literally devastated'' when Crestar Bank acquired Citizens Bank, the only one in town, and threatened to close it, customer Claudette Best recalled. She quickly organized an activist group that got Crestar to keep Citizens open until next June.

But Crestar has cut services, including a drive-up window and safe deposit boxes.

``They left us half a bank; that's what they did,'' Best said.

The tobacco industry had never lost a major suit to a plaintiff who charged that smoking made them sick. But while Philip Morris, R.J. Reynolds and other cigarette makers swore they'd never cave in to thousands of suits already filed - including those brought by state attorneys general - they faced the unsettling prospect of an unknown number of cases in the future.

So lawyers for tobacco, smokers and the states reached a settlement in June to end the suits, and anti-smoking activists hope, to help prevent the next generation of smokers from even starting.

But Congress must approve the deal, and the pact's momentum has waned in the past six months. Lawmakers want to change it, anti-smoking groups attack it and the Clinton administration is keeping it at arm's length.

Still, industry analysts give it a better than even chance of passing. But no one expects it to emerge unscathed.

Under the pact's current terms, tobacco firms would pay $368 billion over 25 years, curb advertising and pay fines of up to $2 billion if teen smoking doesn't drop 30 percent in five years. They would be protected against future suits and win limits on government control of nicotine.

The current plan would require cigarette prices to rise by 70 cents a pack. Under several bills in Congress seeking to alter the deal, a pack that now goes for $2.50 or more would cost an extra $1.50.

And smokers? fSome - estimates range up to 10 percent - would quit rather than pay more. The rest are expected to accept the added cost passed on by cigarette makers.

Said Jim Dickens, 34, of New York: ``I'm addicted. They've got me and they know it.''

Winners and losers

Several of the nation's top executives had a great year, winning big promotions and new contracts, while some others found themselves out on the street. Some businesses withstood adversity while others folded up.

A look at the winners and losers of 1997:

MICHAEL EISNER: The Walt Disney Co. chairman had a great year. He won a new contract that could bring him $300 million over the next 10 years, settled a potentially embarrassing lawsuit with former Disney studio head Jeffrey Katzenberg and sold half a billion dollars in Disney stock.

BARRY DILLER: After failed attempts in recent years to take over Paramount Pictures and merge QVC and CBS, Diller, as head of Home Shopping Network, had a big comeback. His company bought most of Universal Studios' TV business, including the USA and Sci-Fi networks, putting Diller well on the way toward creating the new TV network he wants.

THE BEEF INDUSTRY: There's cholesterol in beef and more people are eating turkey these days, but Americans still want red meat. They proved it when they were undeterred by the recall of 25 million pounds of hamburger patties due to possible E. coli bacteria contamination. Sales dipped at Burger King for a while, but most Americans kept on buying.

LOUIS GERSTNER: The IBM chairman and CEO, who has led the computer maker back from the verge of obsolescence, was asked to stay on until at least 2002. Gerstner got a lucrative compensation package that included options for 2 million shares of IBM stock, which has quadrupled in value since he took over in 1993.

BILL GATES: The Microsoft chairman was still fighting the feds and state officials, who accused the company of antitrust violations, but he cemented Microsoft's domination of the software industrfy. At the annual Macworld computer trade show, Gates, via a huge TV screen, shared the stage with acting Apple Computer CEO Steve Jobs as the two companies announced a once-inconceivable alliance including a $150 million Microsoft investment in Apple.

Jobs was a winner too, regaining the leadership of the company he co-founded and from which was later ousted.

LOSERS

RICHARD SCOTT: The Columbia/HCA Healthcare chairman, who aggressively put together a mammoth hospital and health care conglomerate in just a few years, was forced to resign as the company became the target of government fraud investigations.

JOE CAMEL: The cartoon dromedary, accused by anti-smoking activists of encouraging children to smoke cigarettes, was out of a job.

WOOLWORTH'S: The company that pioneered the five-and-dime store more than a century ago admitted that nostalgia wasn't enough to keep the failing retail format going. Woolworth's stores across the country shut their doors.

JOHN WALTER: He was supposed to succeed Robert Allen as chairman of AT&T, but just eight months after being lured from R.R. Donnelly to become the phone company's president, Walter was out. In three months, AT&T found a replacement, Hughes Electronics head C. Michael Armstrong, and sent Allen off to retirement.

BRE-X: Reports of a huge gold find in Indonesia were too good to be true - the Canadian company admitted that employees added gold to worthless rock samples from the site. The company went into bankruptcy, and investors saw its stock go from a high of more than $200 to just pennies a share.

- Joyce M. Rosenberg, The Associated Press

CAPTION(S):

Photo, box, chart

Photo: (color) Wall Street investors took a real roller coaster ride in 1997

Associated Press

Box: Winners and losers (see text)

Chart: The year on Wall Street