Dow's gain of 29.63 is driven by Ford Earnings of technology, financial companies are better than expected

October 13, 1995|By BLOOMBERG BUSINESS NEWS

NEW YORK -- U.S. stocks rose for a second day yesterday as Ford Motor Co. drove up other auto stocks and a host of technology and financial companies reported better-than-expected earnings.

Texas Instruments Inc., J. P. Morgan & Co., PaineWebber Group Inc. and Student Loan Marketing Association posted surprisingly strong profits for the latest quarter, suggesting that while earnings growth may be slowing, it isn't ending.

The Dow Jones industrial average, up 14.45 Wednesday, climbed 29.63 yesterday, to 4,764.88, boosted most by J. P. Morgan, General Motors Corp. and AT&T Corp.

In the broad market, the Standard & Poor's 500 index gained 3.64 to 583.10. Auto, computer, software, telephone and regional bank stocks rose the most. GM added $1.625, to $46.875, and Chrysler advanced $1.75, to $54.50.

The Nasdaq composite index surged 14.06, to 1,015.63, on top of Wednesday's 18.1-point advance, aided by Cisco Systems Inc., Intel Corp. and Microsoft Corp. The Russell 2000 index of small-company shares rose 2.71 to 300.62, and the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq stock exchanges, surged 42.52, to 5,759.43.

Almost two stocks rose on the New York Stock Exchange for every one that retreated. Volume totaled 344.1 million shares, down from this year's average of 337.7 million.

Shares of Ford jumped $1.875, to $31.875, after the country's second-biggest car maker raised its quarterly dividend 13 percent, filed to buy back $2 billion of preferred stock and said it's considering selling its financing division.

Texas Instruments and International Rectifier Corp. helped technology stocks extend a three-day recovery. Texas Instruments shares rose 87.5 cents, to $74.125, swinging as much as 4 points during the day. The semiconductor maker said third-quarter net income rose to $1.48 a share from 97 cents last year, exceeding analysts' estimate of $1.46.

International Rectifier vaulted $2.625, to $44.25. Its fiscal first-quarter net income climbed to 50 cents a share from 32 cents, topping an average estimate of 43 cents.

Both companies are riding a worldwide wave of demand for computer chips that is forecast to boost industry sales by 40 percent to more than $140 billion this year.

Technology stocks got a boost after Microsoft Chairman Bill Gates said sales of the Windows 95 operating system are exceeding company expectations. Microsoft gained $1, to $87.625.

The Morgan Stanley high tech index of 35 companies climbed 6.77, to 317.21, adding to Wednesday's 10.13-point gain. The Philadelphia semiconductor index rose 4.52, to 252.45, its highest point since Oct. 5.

Shares of financial companies that reported higher-than-expected earnings jumped yesterday. J. P. Morgan rose $2.50, to $80.625; PaineWebber jumped $1.75, to $21.375; Student Loan Marketing Association climbed $2.375, to $59.75; and Green Tree Financial Corp. surged $1.125, to $61.375.

Of the 67 companies in the S&P 500 that have so far reported third-quarter earnings this week, 52.2 percent beat analysts' forecasts and 35.8 percent lagged. Just three days ago, only 44.7 percent of companies exceeded estimates, while 39.5 percent fell short.

Earnings "seem to be coming in reasonably well," said Jim Benning, a trader at BT Brokerage, a unit of Bankers Trust New York Corp. Snap-On Inc. jumped $1.25, to $39.50. The tool

maker's third-quarter net income rose to 65 cents a share from 53 cents and forecasts of 63 cents.

Potlatch Corp. rose 62.5 cents, to $41.625. The timber company earned $1.09 in its latest quarter, up from 37 cents last year and estimates of $1.

Yields on 30-year Treasury bonds dropped as low as 6.38 percent, their lowest since Feb. 11, 1994. Lower yields cut corporate and consumer borrowing costs, and make stocks relatively more attractive in comparison with bonds.

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