Dow adds 17 points late selling dents gain

Philip Morris hurts average again

oil, chemical, retail stocks perform strongly


NEW YORK -- U.S. stocks rose yesterday amid optimism that corporate earnings will expand this year as the economy grows.

Oil, chemical and retail companies gained. Dayton Hudson Corp., one of the nation's biggest retailers, said earnings in the quarter ended Feb. 3 exceeded expectations, and its stock jumped $1.875 to $82.625.

The Dow Jones industrial average closed up 17.34 at 5,586.06, after giving up 43 points in the last hour of trading. Computer-guided "sell" orders contributed 13 points to the drop.

For a second day, the industrials were held back by Philip Morris Cos. The company's stock fell $5.50 to $92.50, shaving about 16 points from the 30-stock average, as concern spread that tobacco companies may have to start paying damages to people who smoked their cigarettes.

Broad market indexes rose. The Nasdaq composite index gained 2.43 to 1,091.07; the Standard & Poor's 500 index added 2.30 to reach 640.85; the Wilshire 5,000 index jumped 28.07 to 6,306.66; the Russell 2,000 index rose 1.62 to 325.08; and the American Stock Exchange market value index climbed 1.01 to 561.78.

About 1,449 stocks rose and 929 fell on the New York Stock Exchange, where about 492.63 million shares changed hands, putting it among the 10 most active days ever.

Oil producers gained as the price of oil soared above $21 a barrel for only the second time in three years. Exxon Corp. rose $1.75 to $81.75; Mobil Corp. rallied $2.125 to $115.50; and Texaco Inc. rose $2.75 to $85.875.

Oil equipment and services companies jumped for a fourth day as investors forecast the commodity's rise would spur a pickup in drilling activity.

Schlumberger Ltd. rose $2.625 to $80.625; Halliburton Co. gained $2 to $58.25; Baker Hughes Inc. strengthened $1.75 to $29.625; and Tidewater Inc. jumped $2.50 to $38.125.

Chemical company shares rose after PaineWebber Inc. said that stockpiles of ethylene, used in making plastic, are below normal levels.

Lyondell Petrochemical Co. climbed $1.875 to $31.50; Dow Chemical Co. rose $2.50 to $88.625; and Georgia Gulf Corp. spurted $2.25 to $35.50.

Merck & Co. rose 37.5 cents to $62 after it won marketing approval from the U.S. Food and Drug Administration for its AIDS drug, Crixivan.

Optimism about the economy sent the Dow Jones transportation average to its highest level ever. The average of 20 rail, airline and trucking companies jumped 36.35 to 2,154.22.

UAL Corp., the parent company of United Airlines, rallied $6 to $201; Delta Air Lines Inc. gained $2.125 to $80.125; and Burlington Northern Santa Fe added $1.875 to $83.

Shares of Boeing Co. gained $1.50 to $82.25 after the Wall Street Journal said China's foreign trade minister had offered to order $4 billion in airplanes from Boeing and McDonnell Douglas Corp. if the U.S. backed off in a software piracy dispute. A Chinese trade official denied the report.

Stock prices got a boost initially from gains in U.S. government bonds. A government report showing an unexpected drop last month of 0.2 percent in prices paid to factories, farmers and other producers suggested that inflation won't rise enough to send bond yields much higher. As a result, companies that raise money by issuing bonds won't see their borrowing costs rise.

The yield on the benchmark 30-year government bond fell as low as 6.64 percent, down 4 basis points, before ending the day unchanged at 6.68 percent. Stock prices have moved in lockstep with bonds during the last week as the outlook for economic growth and interest rates wavered.

Shares of major tobacco companies fell for a second day. On Wednesday, Brooke Group Ltd.'s Liggett Group unit said it agreed in principle to settle four pending state Medicaid suits and a federal class-action case by smokers. Pub Date: 3/15/96

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