Stocks bolstered by German rate cut Dow industrials jump 43 points, to 5,733

Nasdaq adds another 17

August 23, 1996|By BLOOMBERG BUSINESS NEWS

NEW YORK -- U.S. stocks staged their biggest rally in three weeks yesterday as an unexpected cut in German interest rates promised faster economic growth in Europe and a jump in orders for U.S. exporters.

Shares of General Electric Co., Hewlett-Packard Co., Caterpillar Inc. and Intel Corp. paced the advance, as investors speculated that those companies would benefit from enhanced growth abroad.

The Dow Jones industrial average climbed 43.65 to 5,733.47, its highest since May 24. The 30-stock average is less than 45 points from its all-time high. Philip Morris Cos. was among the three Dow stocks that fell, as concern spread that the pace of litigation against cigarette makers will pick up.

The Standard & Poor's 500 index jumped 5.61, or 0.84 percent, to 670.68, boosted most by oil, beverage and regional bank stocks. Hewlett-Packard rose $1.125 to $43; Wells Fargo & Co. added $1.50 to $255.50; and Cabletron Systems spurted $2.75 to $62.50.

The Nasdaq composite index extended Wednesday's late rally, rising 17.12 to 1,143.96, as Intel, Amgen Inc., Cisco Systems Inc. and Microsoft Corp. all advanced.

The Russell 2,000 index of small capitalization stocks rose 2.47 to 331.41; the Wilshire 5,000 index gained 55.22 to 6,551.82; the American Stock Exchange market value index climbed 2.64 to 560.32; and the S&P 400 midcap index rose 1.92 to 233.23.

Oil stocks soared as the price of Texas crude oil surged 58 cents to $22.30 a barrel. Mobil Corp. leaped $2.375 to $115.25; Texaco Inc. climbed $1.125 to $91.125; and Exxon Corp. rose 75 cents to $83.625.

About 1,500 stocks advanced and 865 issues fell on the New York Stock Exchange, where some 354.9 million shares traded.

Germany's lowering of its target money rate to 3.0 percent from 3.3 percent will help stimulate European economies and demand for U.S. goods, analysts said. France, the Netherlands, Belgium and Austria lowered their own interest rates after Germany's move. China and the Bank of Canada also cut key lending rates yesterday.

General Electric rose 62.5 cents to $84.625; Caterpillar climbed 50 cents to $71.875; and Deere rose 75 cents to $40.75.

Software stocks bounced back from two days of losses. Veritas Software Corp., surged $8 to $48.25 after it signed a licensing and marketing agreement with Microsoft Corp., up $1.50 to $125, to insert its disk and storage management software in Microsoft's Windows NT.

Intel, the country's largest maker of computer chips, climbed $2.75 to $83. Smith Barney Inc. raised its investment opinion to "outperform" from "neutral," and said it expected the stock to reach $110 a share within 18 months.

Zenith Electronics Corp. vaulted $5.50 to $16.875 after a joint venture of Ameritech Corp., BellSouth Corp., GTE Corp., SBC Communications Inc. and Walt Disney Co. ordered at least 3 million digital set-top boxes for home entertainment, a contract valued at more than $1 billion.

Among other computer-related shares in the Nasdaq composite, Cascade Communications Corp. rose $4.625 to $66.25; Ascend Communications Inc. advanced $3.625 to $49.125; U.S. Robotics Corp. climbed $3.25 to $54.375; and Dell Computer Corp. rose $3.25 to $64.375.

The yield on the benchmark 30-year Treasury bonds remained unchanged at 6.83 percent.

Philip Morris fell 87.5 cents to $86.75, after falling 3.875 Wednesday; tobacco processor Universal Corp. fell 87.5 cents to $25.25, extending Wednesday's 75-cent slide; Loews Corp., which makes Newport and Kent cigarettes, dropped $1.50 to $75.125; and snuff maker UST Inc. lost 12.5 cents to $30.75, a day after dropping 87.5 cents.

Stock markets overseas were higher. The Nikkei 225 Index in Japan rose 0.41 percent; Britain's FT-SE 100 Index gained 0.49 percent to a record 3891.1; Germany's DAX Index rose 0.53 percent; and France's CAC 40 Index climbed 0.86 percent.

Pub Date: 8/23/96

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