Dow gains 18.67, sets another record

March 28, 1995|By Bloomberg Business News

NEW YORK -- U.S. stocks again reached record highs yesterday amid optimism that the economy is slowing enough to keep interest rates low without harming corporate profits.

With companies set to begin reporting first-quarter earnings early next month, "people are a little bit in dreamland here," said Eugene Grandone, money manager at $6 billion Northern Investment Advisers in Chicago. "What people are looking for is accelerating earnings. A lot of the strength you're seeing here is based on the anticipation of more [positive] surprises."

The Dow Jones industrial average climbed 18.67, to 4,157.34, the eighth high in the past 12 sessions. Higher prices for Boeing Co., J. P. Morgan & Co. and American Express contributed to a last-minute surge. The Dow industrials are ahead 482.71 points, or 13 percent, since Nov. 23.

The Standard & Poor's 500 stock index also touched a record, rising 2.23, to 503.20. Food, bank, drug, auto and aerospace stocks also rose.

Almost 13 common stocks rose for every nine that fell on the New York Stock Exchange, where volume fell to 296.3 million shares from this year's average 332 million.

The Nasdaq composite index rose 3.97, to a record 822.63, as Cisco Systems Inc., U.S. Healthcare Inc., Bay Networks Inc. and Adaptec Inc. advanced.

Yesterday's gains came on top of Friday's 50.84-point rally in the Dow industrials, spurred by confidence about stable interest rates and robust corporate profits. Stocks rallied last week as a government report showed factory orders for big-ticket goods fell in February for the first time since October.

The latest evidence that economic growth is decelerating came when the National Association of Realtors said sales of previously owned homes dropped 5 percent in February, the second straight monthly decline.

Evidence the economy is slowing means the Federal Reserve is unlikely to raise rates at today's meeting of its policy-setting Open Market Committee, said Anthony Conroy, director of equity trading at BT Global Asset Management, a unit of Bankers Trust New York Corp. "Things are status quo, and earnings continue to be the catalyst for a stronger market."

Boeing Co. spurted $1.875, to $51.625, after reaching a 52-week high of $51.875. Europe's Airbus Industrie forecast countries in Asia and the Pacific will buy $340 billion worth of planes in the next 20 years. On Friday, Boeing offered early retirement to 13,000 workers and threatened to lay off another 5,000.

Financial stocks, which are regarded as sensitive to swings in interest rates, surged as American Express announced plans to buy back as many as 40 million common shares.

American Express climbed $1.25, to $35.25, a 52-week high; Federal National Mortgage Association jumped $2.625, to $82.625; and Federal Home Loan Mortgage Corp. rallied $2.25, to $61.125.

Health maintenance organization stocks jumped after WellPoint Health Networks Inc. said it was in talks to buy Health Systems International Inc. for about $1.7 billion.

Health Systems rose $1.375, to $32.375; WellPoint added $2.75, to $33.75; Healthsource Inc. climbed $3.25, to $45; HealthWise of America Inc. spurted $4, to $35; Oxford Health Plans Inc. soared $12.625, to $109.50; and Mid Atlantic Medical Services Inc. jumped $1.375, to $22.75.

Semiconductor stocks climbed for a fourth day amid expectations that demand will stay strong for memory chips and microprocessors.

Intel rose $1.375, to $87.50; Motorola Inc. added $1.25, to $56.625; and Texas Instruments Inc. surged $2.625, to $96.375.

Oil stocks rose as crude oil prices pushed through $19 a barrel for the first time since Nov. 4. Exxon Corp. rose 37.5 cents, to $66.375; Amoco Corp. added 50 cents, to $62.375; Mobil Corp. gained 87.5 cents, to $91.25; Royal Dutch Petroleum advanced 62.5 cents, to $118.125; and Texaco Inc. increased 37.5 cents, to $66.25.

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