Dow 30 surges 75 points, to 5,729 Other indexes rise as computer issues continue to rebound

July 02, 1996|By BLOOMBERG BUSINESS NEWS

NEW YORK -- U.S. stocks rose yesterday as reports of better-than-expected economic growth and spending raised the fortunes of companies closely tied with the economy.

The Dow Jones industrial average notched its biggest gain since March 18, surging 75.35, or 1.3 percent, to 5,729.98.

The Standard & Poor's 500 index gained 5.25 to 675.88 and the technology-laden Nasdaq composite index jumped 12.43 to 1,197.45.

Among broad indexes, the Russell 2,000 index of small capitalization stocks climbed 1.11 to 347.22; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq exchanges, bounded 54.04 to 6,666.81; the American Stock Exchange market value index rose 3.46 to 580.26; and the S&P midcap index was up 1.87 to 237.87.

Bonds retreated after a report on manufacturing orders in June showed a bigger-than-expected increase, suggesting the economy may be growing fast enough to accelerate inflation.

The yield on the benchmark 30-year Treasury bond rose 2 basis points to 6.91 percent.

In another sign of economic strength, the Commerce Department said consumer spending rose 0.8 percent in May, more than expected.

Semiconductors were among the top gainers as the rally in computer-related stocks went into a third day. Merrill Lynch & Co. said supply pressures that depressed chip prices earlier this year have eased.

A pickup in sales is expected in the fourth quarter and the next chip boom could occur in 1998, sending chip stocks up 75 percent from current levels, the firm said in a report.

Among the stocks highlighted in the report, Texas Instruments Inc. jumped $2.125 to $52; Xilinx Inc. gained $1.50 to $33.25; and Avnet Inc. rose $2.125 to $44.25. Intel Corp., the world's largest chip maker, jumped $1.6875 to $75.125.

Among other computer-related stocks, Cisco Systems Inc., a network systems builder, rose $1.75 to $58.375. Microsoft Corp., the world's largest software company, jumped $2.1875 to $122.3125.

Printer and computer maker Hewlett-Packard Co. rose $2 to $101.625; America Online rose $2.375 to $46.125; and Gartner Group Inc., which sells market research to information technology organizations, climbed $2 to $38.625.

Companies announced about $8.5 billion in buyouts yesterday, some at large premiums to Friday's stock prices.

That contributed to investors' confidence that stock values remain reasonable, more than a decade into the bull market for U.S. stocks.

Among them:

Halliburton Co., an oil field engineering firm, said it would pay $557 million, or $31.86 a share, for Landmark Graphics Corp. Landmark, which sells computer-aided systems for oil exploration, jumped $9.50 to $28.75. Halliburton fell $3.125 to $52.375.

National Re Corp. surged $13.625 to $51.375 after General Re Corp. said it would pay $53 a share, or $940 million, in stock and cash for the smaller reinsurer. General Re gained $2.25 to $154.50.

Brooktree Corp., a maker of integrated circuits for computer-based graphics, rose $3.75 to $14.25 after Rockwell International Corp. said it would acquire the company for $15 cash a share, or $275 million.

Rockwell, the top maker of chips for computer modems, slid 62.5 cents to $56.75.

Tribune Co. agreed to buy Renaissance Communications Corp. for $36 a share, adding six televisions stations to the 11 already owned by the parent corporation of the Chicago Tribune. Tribune gained $1 to $73.625, and Renaissance jumped $1.625 to $33.875.

Top gainers among the Dow industrials were Du Pont Co., a chemical company, which surged $3 to $82.125; Caterpillar Inc., a maker of construction equipment, which gained $2.25 to $70; and International Business Machines Corp., the world's largest computer company, which rose $2.625 to $101.625.

Bank stocks moved higher, even as bonds gave back some of last week's gains. National City Corp. gained most, rising $1.75 to $36.875 as the Cleveland-based bank boosted its quarterly dividend and said its earnings would beat estimates this year. NationsBank Corp. rose $1.625 to $84.25 and Wells Fargo & Co. jumped $2.375 to $241.50.

Pub Date: 7/02/96

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