Stocks rise for first time in 10 days Falling interest rates spark rebound, led by financial, retail issues

April 13, 1996|By BLOOMBERG BUSINESS NEWS

NEW YORK -- U.S. stocks rose yesterday for the first time in 10 days as falling interest rates brightened the outlook for corporate earnings. Financial and retail companies led the advance.

The Dow Jones industrial average rose 45.52 to 5,532.59. The 30-stock average had lost 3.5 percent in the first four days of the week.

For the week, the Dow lost 150.29, or 2.6 percent. It is down by the same percentage since reaching a record 5,689.74 on April 3.

Without International Business Machines Corp., down $6 to $111.50, the Dow would have gained about 62. SoundView Financial Group cut its investment opinion on IBM to "hold," and Smith Barney downgraded it to "outperform" from "buy" because of concern that demand for personal computers is slowing.

Telephone stocks that pay above-average dividends rose, as falling bond yields made their high payouts look more attractive. Drug and soft-drink stocks rose as new signs of economic weakness spurred gains in companies that have relatively consistent earnings growth.

In the broader market, the Standard & Poor's 500 index climbed 5.53 to 636.71. It lost 2.9 percent for the week. The Nasdaq composite index was ahead 3.80 to 1,100.94, but was down 1.54 percent for the week.

The Russell 2,000 index of small-company shares rose 1.71 to 331.18; the Wilshire 5000 index gained 47.07 to 6,287.21; the American Stock Exchange market value index climbed 2.07 to 572.26.

Advancing stocks outpaced decliners on the New York Stock Exchange by about 15 to 8. Volume totaled some 413 million shares on the New York Stock Exchange, down from this year's average of 423.8 million.

The market gave plenty of evidence of investors' renewed enthusiasm. Yahoo! Inc. leaped $20 to $33, more than doubling its initial offering price of $13. More than 17 million Yahoo! shares changed hands, even though the 13-month-old Internet directory provider sold only 2.6 million shares.

Stocks got a lift from the bond market as Treasury bond yields fell. Yields on benchmark 30-year Treasury bonds tumbled to 6.79 percent yesterday from 6.94 percent yesterday, and five-, seven- and 10-year bonds saw even larger declines.

Lower bond yields especially boosted companies such as banks and utilities that borrow a lot of money to finance their lending.

Banc One Corp. climbed $1.25 to $34.375; Wells Fargo & Co. jumped $5.25 to $251.50; First Union Corp. climbed $1.25 to $59.50; Chase Manhattan Corp. rose $1.625 to $68.50; and J.P. Morgan & Co. rose $2 to $79.125.

Among credit-card issuers, mortgage lenders and insurers, Federal Home Loan Mortgage Corp. gained $1.875 to $83.625; MBNA Corp. rallied 50 cents to $28.875; and Transamerica Corp. rose $1.625 to $73.50.

After the Dow Jones utilities average fell to its lowest point since Sept. 13, an array of utility stocks rose. American Electric Power gained 50 cents to $40.625; DTE Energy Co. increased 37.5 cents to $32.125; and Consolidated Edison of New York Inc. rose 12.5 cents to $30.

Automakers rallied after reports that Chrysler Corp. plans to boost second-quarter production 3.2 percent and that U.S. car sales to Japan surged 50 percent since a trade agreement last August. Chrysler climbed $1.50 to $61.75 and General Motors Corp. rose 87.5 cents to $55.625.

Ford Motor Co. gained 50 cents to $34.25 after the country's second-largest automaker agreed to invest $482 million in Mazda Motor Corp., giving it effective control over the struggling Japanese automaker.

Telephone stocks rebounded from recent losses as their high dividend payments grew more attractive compared with bonds. Ameritech Corp. jumped $1.875 to $55.375; Nynex Corp. gained $1.625 to $50.625; and Bell Atlantic Corp. surged $1.625 to $61.125.

Pub Date: 4/13/96

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