Dow leaps 50 points to another new high Blue chips surge on earnings news

Nasdaq rises 15.42

January 25, 1996|By BLOOMBERG BUSINESS NEWS

NEW YORK -- U.S. stocks soared yesterday as Johnson & Johnson, United Technologies Corp. and DuPont Co. posted unexpectedly strong earnings, and semiconductor shares rallied.

The Dow Jones industrial average jumped 50.57 to a record 5,242.84. Since falling to 5,032.94 Jan. 10, the 30-stock Dow average has jumped 4.17 percent.

Stocks gained for the fourth time in five days as bond yields fell, in part on expectations that the Federal Reserve Board will cut interest rates at a policy meeting next week.

The gains came as President Clinton and Republican lawmakers made conciliatory remarks about resolving the budget impasse following Tuesday night's State of the Union address.

The Standard & Poor's 500 index rose 7.17 to 619.96, still shy of a Dec. 13 record 621.69. The Nasdaq composite index gained 15.42 to 1,043.46.

Advancing stocks outnumbered decliners by nearly 14 to 9 on the New York Stock Exchange, where volume jumped to 476.4 million shares.

The Wilshire 5,000 index climbed 65.86 to 6,068.19; the Russell 2,000 index grew 2.12 to 310.43; and the American Stock Exchange market value index rose 3.95 to 537.51.

United Technologies surged $3.125 to $97.375, adding 9 points to the Dow Jones average. The maker of Pratt & Whitney jet engines and Otis elevators earned $1.42 a share in the fourth quarter, up from $1.26 a year earlier and surpassing estimates of $1.36.

DuPont Co. climbed $2.125 to $74.125. The chemical company posted profit from operations of $1.28 a share, up from 95 cents last year and forecasts of $1.18.

Other advancing stocks in the Dow industrials included International Business Machines Corp., ahead $4 to $107. Since posting better-than-expected earnings Thursday, IBM shares have rallied $19.375, or 22 percent.

Procter & Gamble climbed $2.125 to $88.25. The maker of Ivory soap won Food and Drug Administration approval to sell olestra, a fat replacement that could eliminate wight gain associated with snacking.

Johnson & Johnson, a leading drugmaker, climbed $6 to $93.75. It said fourth-quarter earnings expanded to 72 cents a share from 59 cents in the year-earlier period, above forecasts of 68 cents.

TRW Inc. surged $2.50 to $82.375. Fourth-quarter earnings rose 15 percent, driven by strong sales in its space-and-defense and automotive units.

Semiconductor stocks posted their biggest one-day gain in nearly two months. Lifted by rising profits at Cypress Semiconductor Corp., the Philadelphia semiconductor index spurted 11.78 to 191.22.

Cypress surged $2.25 to $14.375 after PaineWebber Group Inc. raised the stock to "buy" from "hold." Late Tuesday, the company said quarterly profits soared 125 percent to $35.6 million, or 40 cents a share, from $15.8 million, or 19 cents, beating expectations of 39 cents.

Other computer-related stocks also helped improve investor sentiment toward the industry. Shares of BMC Software Inc. jumped $8.50 to $51.75 after several analysts raised their investment recommendations on the stock. BMC reported profit from operations of 69 cents a share for its fiscal third quarter, surpassing analysts' estimates of 66 cents.

Chip maker Micron Technology Inc. vaulted $5.125 to $37.125 and Novellus Systems Inc., which makes the equipment used to make chips, jumped $5.375 to $54.875. Integrated circuit maker Linear Technology Corp. gained $6 to $45.50 and Xilinx Inc., a maker of specialty chips, advanced $3.50 to $43.

Xerox Corp. slumped $15 to $126.625. The photocopier maker earned $3.30 from operations in the fourth quarter, higher than the year-earlier $2.76 but 10 cents short of analysts' estimates.

Yields on 30-year Treasury bonds dropped to 6.03 percent from 6.09 percent and the dollar climbed.

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