Financials lead stocks to new high at 5,105 Drug stocks help rise to 65th record of year, but Motorola falters

November 30, 1995|By BLOOMBERG BUSINESS NEWS

NEW YORK -- U.S. stocks rose to records yesterday, led by financial shares, after Travelers Group Inc. agreed to pay $4 billion for Aetna Life & Casualty Co.'s property and casualty insurance unit.

The acquisition spurred hopes that more financial companies will combine as a way to cut costs and boost profits. Some investors said bank and brokerage stocks still have room to rise even though they are among the year's best performers.

The Dow Jones industrial average rallied 27.46 to 5,105.56, its 65th record this year and 13th gain in 15 sessions.

Drug shares helped fuel the gain. Merck & Co. rose after the company's board authorized the repurchase of another $3 billion in common stock.

The Standard & Poor's 500 index rose 1.19 to a record 607.64, boosted by a late series of computer-guided buy orders. The Nasdaq composite index, benefiting from an advance in technology shares, jumped 7.52 to 1,057.57.

Traders said falling bond yields helped financial stocks. The benchmark 30-year Treasury bond's yield slid to 6.19 percent -- a 22-month low.

About 13 stocks rose on the New York Stock Exchange for every nine that fell. More than 401 million shares traded on the Big Board, exceeding the three-month daily average of 355 million.

Among the decliners, shares of Motorola Inc. slumped $3.50, to $61.125, amid concern that the pace of cellular phone sales has slowed in the fourth quarter from a year ago. Nokia Corp., one of Motorola's competitors, saw its American depositary receipts slide $1.625, to $55.25.

Motorola's drop overshadowed gains in other technology companies. With many tech stocks having racked up big gains this year -- the Morgan Stanley high-tech index is up 65 percent -- analysts said money is starting to be directed into technology companies such as Netscape Communications Corp. and Pixar that are new to the game.

For a second day, shares of companies that make products for the Internet rallied. The Interactive Week Internet index jumped 5.01 to 252.24. Optimism spread that demand for new types of computer software and equipment will grow as more businesses and consumers use on-line services.

Shares of Spyglass Inc. jumped $14.75, to $111.75; Netscape rallied $9, to $140; Uunet Technologies Inc. added $4.125, to reach 80.375; and Netcom On-Line Communication Services Inc. rose $5.50, to $76.

Makers of chips, computer hardware and software also benefited. Shares of semiconductor equipment maker Applied Materials Inc. jumped $1.875, to $48.125, after the company said fiscal fourth-quarter earnings more than doubled.

Sun Microsystems Inc. rallied $2.75, to $84.25, and Texas Instruments Inc. rose $1.125, to $59.50.

Supporting gains in stocks were expectations that fresh money from new mutual fund sales will extend this year's stock market rally.

Among broad market indexes, the Russell 2,000 index of small capitalization stocks rose 2.1 to 306.72; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq stock exchanges, rose 22.46, to a record 5,973.93; the Amex market value index rose 2.29, to 533.03; and the S&P 400 midcap index rose 1.75, to 217.3.

Yesterday's most active stocks in U.S. composite trading were Telefonos de Mexico SA's American depositary receipts, Pixar, Micron Technology, Applied Materials and Motorola.

Among the financial stocks that rose, Merrill Lynch & Co. jumped $1.125, to $55.625 and Household International Inc. rose $2.125, to $61.125. Aetna's shares fell $3.875 to $72 after climbing 10 percent in a month.

Shares of Bankers Trust New York Corp. rose $2.625, to $65.25 after Vice Chairman Frank Newman told analysts that the company is well capitalized, prompting some to conclude that its dividend won't be cut.

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