Dow rises 57 points Nasdaq hits record

Investors snap up computer shares as Greenspan stirs optimism

February 22, 1996|By BLOOMBERG BUSINESS NEWS

NEW YORK -- U.S. stocks soared yesterday, snapping a four-day losing streak, as the Nasdaq composite index reached an all-time high and investors bought shares of computer companies whose profits would excel even if interest rates don't fall further.

The gains came after Federal Reserve Chairman Alan Greenspan, in the second day of his semiannual speech to Congress about the state of the economy, partially restored optimism that the central bank will trim borrowing rates enough to boost companies' sales later this year.

After four days of declines, the Dow Jones industrial average climbed 57.44, to 5,515.97. The surge recouped all of the average's declines Tuesday, when Mr. Greenspan dampened optimism that rates would fall by telling Congress that the economy was "on track for sustained growth."

Yesterday, Mr. Greenspan told the Senate that the central bank could cut rates more "if we envisage that inflation pressures are significantly subdued."

Economically sensitive issues rebounded after five days of declines. The Morgan Stanley cyclical index jumped 5.60, or 1.6 percent, to 362.83.

Among the broader indexes, the Standard & Poor's 500 index climbed 7.45 to 648.10, lifted by gains in construction, restaurant, communications equipment and retail stocks.

Gains in Microsoft Corp., Intel Corp. and Cisco Systems Inc. helped push the Nasdaq index up 13.61 to a high of 1,096.85, beating its record of 1,095.38 Feb. 12.

Shares of semiconductor and communication equipment gained for a fourth day amid optimism companies and consumers will continue to snatch up their products regardless of where rates headed. The group gained yesterday even as the Dow industrials dropped 44.79 points.

The Morgan Stanley High Tech Index rose 7.44, or 2.2 percent, to 345.47 as Hewlett-Packard Co. climbed $2.625 to a record $98.375. The computer company surprised analysts with its strong earnings a week ago.

Among others that contributed to the advance, Intuit Inc. rose $2.50 to $63.50. Cisco Systems climbed $1.5625 to $47.1875, and was the second most actively traded stock on U.S. exchanges. after Hanson PLC. On Tuesday, Cisco split two-for-one.

SoftKey International Inc. posted a 62 percent increase in fourth-quarter earnings as sales of its software surged. The shares jumped $1.375 to $25.375. Microsoft, a leader in the software industry, added $2.125 to reach $99.875.

Among other indexes, the Russell 2,000 index of small capitalization stocks rose 2.43 to 321.59; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq stock exchanges, rose 66.79 to 6342.48; the American Stock Exchange market value index climbed 6.58 to 565.10; and the S&P 400 midcap index added 1.92 to reach 227.15.

Some 1,525 stocks rose and 818 stocks fell on the New York Stock Exchange, where 431.2 million shares changed hands.

The Dow Jones transportation average jumped 39.72 to 2,067.57, its highest level in more than two months.

BAirline stocks took off after Delta Air Lines Inc. said its pilots agreed to a tentative four-year contract, ending two years of bitter contract dispute and averting a strike. The company's stock gained $2.875 to $76.50. AMR Corp. followed suit, rising $3.625 to $85.375. UAL Corp., parent of United Airlines, jumped $4.125 to $182.

Atlantic Coast Airline Inc. climbed on better-than- expected earnings. Its stock jumped $1.0625 to $10.5625.

Shares of Viacom Inc. rose $1.50 to $41.125 after the cable

network company said its fourth-quarter loss narrowed to 3 cents a share after the payment of dividends on its preferred stock, from a loss of 14 cents in the corresponding period a year earlier.

Shares of Caterpillar rose $1 to $68.875. And Boeing jumped $2.25 to $83.

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