Greenspan speaks U.S. stocks rebound

Dow marks biggest gain in 4 months

July 19, 1996|By BLOOMBERG BUSINESS NEWS

NEW YORK -- U.S. stocks surged yesterday after Federal Reserve Chairman Alan Greenspan said the central bank might be willing to raise interest rates to head off inflation and aid economic expansion. The Dow Jones industrial average registered its biggest gain in four months.

Surprisingly good profits from Merck & Co. and McDonald's Corp. helped push the Dow industrials up 87.30 points, or 1.6 percent, to 5,464.18. It was the biggest leap since a 1.8-percent gain March 18, also a day when optimism about profits cheered investors.

Among broad market indexes, the Nasdaq composite index, filled with computer, software and semiconductor issues, gained to 1,109.82.

The Standard & Poor's 500 index climbed 9.49 to 643.56; the Russell 2,000 index of small capitalization stocks rose 4.74 to 322.93; the Wilshire 5,000 Index, comprising stocks on the New York, American and Nasdaq stock exchanges, rallied 98.71 to 6,215.66; the American Stock Exchange market value index rose 11.64 to 551.63; and the S&P 400 midcap index rose 3.6 to 223.79.

Yesterday's most active stocks in U.S. composite trading were AT&T, Sun Microsystems, Intel, Cisco Systems Inc. and Iomega Corp.

Trans World Airlines Inc. dropped $1 to $10.25, reflecting the mid-air explosion of a TWA 747-100 jet exploded that crashed into the Atlantic Ocean late Wednesday.

Merck's stock jumped $1.625 to $64.375 after it said robust sales of its cholesterol-lowering drug Zocor helped second-quarter earnings jump 13 percent.

McDonald's rallied $1.125 to $45.375 after it said earnings rose 11 percent, helped by rising sales at U.S. fast-food restaurants.

Giving a further boost to stocks, the yield on the benchmark 30-year Treasury bond fell to 6.92 percent -- its lowest since July 1 -- from 7.02 percent Wednesday.

Advancing stocks outnumbered decliners by 1,851 to 634 on the New York Stock Exchange, the second day in a row that the disparity topped 1,000 stocks. Some 469.7 million shares traded, two days after a record 680.3 million shares changed hands.

Bank shares gained on optimism that loan activity will pick up as the cost of borrowing declines. The S&P index of six big banks rose 7.25 to 267.20, as Citicorp jumped $3.125 to $81.875; Chase Manhattan Corp. rose $1.75 to $69.50; and BankAmerica Corp. climbed $2 to $78.875.

And shares of Apple Computer Inc. surged $4 to $20.875, after the company reported a lower-than-expected quarterly loss, setting off a rally in computer shares.

After the exchanges closed Wednesday, Sun Microsystems Inc., major supplier of computer networking software, reported earnings of 85 cents a share, beating the 84-cent average forecast from 20 analysts surveyed by IBES International Inc. Sun rose $3.4375 to $58.4375 yesterday.

The Morgan Stanley consumer index jumped 4.67 to 299.79. PepsiCo Inc. gained $1.375 to $32.625; Coca-Cola Co. climbed $1.375 to $47.375; American Home Products Corp. climbed $1.375 to $56.25; and Schering-Plough Corp. jumped $1.25 to $60.25.

Pub Date: 7/19/96

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