Dow hits record with rise of 18.06 Corporate profits expected to surpass last year's pace


NEW YORK -- The Dow Jones industrial average climbed to its 19th record of 1996 and U.S. stocks rose for a third day yesterday as investors anticipated that a rebounding economy would spark faster earnings growth later in the year.

Companies such as Whirlpool Corp., whose businesses are closely tied to swings in the economy, and semiconductor makers showed the biggest gains.

Corporate profits from operations are seen growing at an annual rate of about 16 percent in the fourth quarter, up from less than 6 percent in the first three months of the year, IBES International Inc. said.

The 30-stock Dow average rose 18.06 to 5,689.74, eclipsing its March 18 record. International Business Machines Corp., Philip Morris Cos. and Caterpillar Inc. all climbed a point or more.

In the broader market, the S&P 500 index rose 0.62 to 655.88, still below the record of 661.45, and the Nasdaq composite index was ahead 4.56 to 1,115.85, just shy of its 1,117.79 record.

The Wilshire 5,000 index reached a record 6,455.49, up 6.42, eclipsing its Feb. 22 record. The Russell 2,000 index of small-company stocks rose to its third straight record, up 0.84 to 334.07. The American Stock Exchange market value index climbed 1.67 to 574.32.

Falling stocks outnumbered advancing issues by more than 6 to 5 on the New York Stock Exchange, where volume dropped to 386.5 million shares from 406.6 million yesterday.

IBM led the Dow industrials higher for a second day, climbing $2.125 to $119.75, and adding 7.3 points to the average. Tuesday, Lehman Brothers told investors IBM shipped 80 percent more computing power in the first quarter than it did in the same period a year ago, sufficient to send quarterly profits to $2.39 a share. First-quarter profits last year were $2.12 a share.

Yesterday, IBM said it received a contract to manage the computer systems of semiconductor maker LSI Logic Corp.

Semiconductor stocks, which benefit from increases in capital spending, surged. Lattice Semiconductor Corp. climbed $2.25 to LSI Logic Corp. jumped $1.625 to $28.50; and Texas Instruments Inc. vaulted $1.625 to $51.75. The Philadelphia semiconductor index vaulted 4.34, or 2.5 percent, to 179.05.

Philip Morris, the maker of Marlboro cigarettes, surged $1.625 to $92. Lawyers for the tobacco industry argued forcefully before a three-judge federal appeals court panel that a class action on behalf of tens of millions of smokers should be transformed back into a suit on behalf of only a handful of people.

Household appliance maker Whirlpool rallied $3.125 to $57.125, leading a 0.73-point rise to 382.21 in the Morgan Stanley index of so-called "cyclical" stocks. Sears, Roebuck & Co., one of Whirlpool's largest customers, named Whirlpool one of four award winners in an annual review of more than 10,000 suppliers.

Airline stocks gained for a second day. Northwest Airlines Corp. climbed $2.875 to $52.875 after the Minneapolis-based airline announced plans to start a twice-weekly cargo service to Japan's Kansai International Airport in early June. The route was opened by a recent U.S.-Japanese trade agreement.

Alaska Air Group Inc. climbed $1.75 to $29.75, its highest number since 1989. The percentage of seats filled on the West Coast airline rose to 68.5 percent in March from 59.4 percent a year ago.

UAL Corp. rallied $7 to a record $217 after Chairman Gerald Greenwald said a Japanese government plan to impose sanctions against U.S. airlines would violate airline agreements between the two countries.

Ericsson AB American depositary receipts dropped $1.75 to $18.625. The Swedish telephone equipment maker had negative cash flow, hampering its chances to expand in the future, the company's financial officer said in a company newsletter.

Pub Date: 4/04/96

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