Stocks climb through 5,400 Dow industrials make another high amid computer chip optimism

February 02, 1996|By BLOOMBERG BUSINESS NEWS

NEW YORK -- U.S. stocks climbed to records yesterday, led by semiconductor and computer companies amid signs of growing demand for their products.

Intel Corp. and International Business Machines Corp. paced the advance after a Bear, Stearns & Co. analyst reported that orders for LSI Logic Corp.'s computer chips picked up in January.

After being in minus territory most of the session, the Dow Jones industrial average gained 9.76 points late in the session to a record 5,405.06 -- the seventh record of this year for the 30-stock average and the first time it has closed above 5,400.

A resurgence in chip demand was the good news investors were looking for a day after the Federal Reserve trimmed key interest rates.

Texaco Inc. and Chevron Corp. boosted the Dow industrials after announcing that they reached final agreement to sell their stake in a Japanese refining venture for $1.87 billion. Texaco rose $1.875, to $82.75 and Chevron rose $1.25, to $53.125. In the broader market, semiconductor, software and computer issues

helped the Standard & Poor's 500 index rise 2.44 to a record VTC 638.46, its fourth straight high.

The Nasdaq composite index jumped 9.66, to 1,069.45, a hair under the record 1,069.79 of Dec. 4. Microsoft Corp., Intel Corp. and Amgen Inc. led the gains.

Wal-Mart Stores Inc. was the most active stock on U.S. exchanges, rising $1.375, to $21.75 in trading of just under 12 million shares.

Some 1,371 stocks rose and 999 stocks declined on the New York Stock Exchange. About 458.75 million shares changed hands, down from 472.22 million yesterday but above 364.18 million daily average volume over the last six months.

The rally boosted other indexes to all-time highs. The Russell 2,000 index of small companies gained 1.94 to a record 317.32. The Wilshire 5,000 index climbed 28.44, to 6,240.26, another record. The American Stock Exchange market value index rose 1.58, to 555.68.

Computer and semiconductor shares climbed after Bear Stearns analyst Andrew Neff said in a report to customers that increasing demand for networking computers fueled stronger sales of semiconductors last month.

Rising demand will help companies such as LSI Logic sell more chips as they expand their manufacturing capacity. LSI shares soared $3.875, to $32.125 and boosted other semiconductor issues.

The Philadelphia semiconductor index of 16 stocks, down 32 percent since June 30, gained 7.40, or 4 percent, to 194.13. Motorola Inc. added $2 to reach $56; Applied Materials Inc. climbed $2.875, to $39.875; and Intel gained $1.15625, to $56.25.

Hewlett-Packard Co. surged $2.25, to $87 and Bay Networks Inc., a maker of networking products, jumped $1.125, to $43.625.

The prospect of stronger earnings helped boost Whirlpool Corp. $2.625, to $57. The maker of refrigerators and air conditioners said profits will improve in 1996, especially in the third and fourth quarters. The outlook came as the company reported an 81 percent drop in fourth-quarter earnings.

Amgen added $2.875 to reach $63 after reporting that fourth-quarter profits jumped 26 percent, driven by stronger sales of its leading drugs. Earnings of 52 cents a share fell 2 cents short of analysts' expectations.

Netscape Communications Corp. fell $13.50, to $150.75. The Internet software company announced plans to purchase InSoft, privately held multimedia software developer, after the market closed yesterday. Netscape also posted fourth-quarter earnings of 6 cents a share, compared with a year-ago loss of 22 cents. Analysts had hoped that the company would better estimates.

Gold stocks rose for a second day, mirroring a $5.20 surge in the price of bullion to $413.70, a 5 1/2 -year high. Newmont Mining Corp. gained $2.125, to $58.125; Barrick Gold Corp. rose $1.50, to $30.875; and Homestake Mining Co. gained 62.5, cents to $19.625.

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