Stocks surge on earnings surprises Dow industrials up 51

Nasdaq index also leaps


NEW YORK -- U.S. stocks gained yesterday for a second day as optimism spread that a long-anticipated slowdown in profit growth isn't near. The Dow Jones industrial average notched its biggest two-day gain in five months.

Computer maker Gateway 2000 Inc., mutual fund manager T. Rowe Price Associates Inc. and grocer Whole Foods Market Inc. were the latest companies to surprise investors with unexpectedly strong earnings.

The Dow industrials rose 51.05 to 5,473.06, a day after rallying 67.32 points. Taken together, the gains represented the best back-to-back advance in the Dow since a 2.75 percent leap ended Feb. 22. For the week, the 30-stock average rose 0.84 percent and overcame a six-month low on Tuesday.

The 15 most active stocks in U.S. trading were computer-related. Intel Corp., up $2.125 at $74.25, was the most active, with more than 10.3 million shares changing hands.

Broad market indexes also gained. The Nasdaq composite index rose 17.05 to 1079.44, after jumping 20.03 points Thursday. The Standard & Poor's 500 index climbed 4.73 to 635.90.

Advancing stocks outnumbered decliners by 1,521 to 823 on the New York Stock Exchange, where some 349.8 million shares traded.

Semiconductor makers were among the biggest gainers, bolstered by better-than-expected second-quarter earnings this week from computer makers International Business Machines Corp. and Compaq Computer Corp. and those companies' expectations of a stronger second half.

Prudential Securities Inc. raised its ratings on chip stocks to "buy." Besides Intel, Motorola Inc. climbed $1.625 to $54.75, Applied Materials Inc. jumped $2.25 to $25.0625 and Micron Technology Inc. rose $1.375 to $19.50.

The Morgan Stanley high tech index soared 9.99 points, or 3.4 percent, to 305.46.

Gateway 2000 climbed $2.375 to $39.75 after it said second-quarter profits surged 48 percent. Digital Equipment Corp. rose 75 cents to $34.875; Seagate Technology jumped $3.25 to $47.625; Compaq gained $1 to $52.875; and Hewlett-Packard Co. rose 37.5 cents to $44.125.

The S&P chemicals index rose 6.00 to 326.47, its highest since July 12. DuPont rose $1.25 to $80.50; Dow Chemical climbed $1.875 to $73.75; and Union Carbide Corp. rose $1.125 to $40.75.

T. Rowe Price's stock rose 75 cents to $25 after the company said earnings in the latest three months rose 34 percent as customers poured money into mutual funds and generated soaring management fees.

And Whole Foods Market climbed $4.125 to $28.75 after it said fiscal third-quarter net income tripled.

Pub Date: 7/27/96

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