NEW YORK -- U.S. stocks rose yesterday, powered by a late-day rebound in International Business Machines Corp., as investors reappraised the profit outlook for the bellwethers of the computer industry.
Cisco Systems Inc., Microsoft Corp. and other computer shares recovered from a sell-off that began last week when analysts warned that Intel Corp. may not duplicate its 1996 growth rate. Semiconductor and software stocks led the market to records last year.
The Dow Jones industrial average closed 51.57 higher at 6,858.11, after giving up three smaller rallies.
IBM led the advance along with United Technologies Corp., which rose $3 to $74 after President and Chief Executive George David told analysts he expects to accelerate the company's stock buyback program and predicted that 15 percent earnings growth will continue.
The Standard & Poor's 500 index rose 4.16 to a record 789.59. Computer-related shares led gainers, after being down for much of the day. IBM rose $2.50 to $145.25; Compaq Computer Corp. rose $3.125 to $80.50; and Microsoft Corp. gained 75 cents to $98.50.
The Nasdaq composite index closed down 3.83 at 1,331.51, after tumbling 15.65; the Russell 2,000 index of small capitalization stocks lost 1.40 to 362.75; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq exchanges, climbed 18.50 to 7,561.24; the American Stock Exchange composite index added 1.40 to 589.24; and the S&P mid-cap index slid .23 to 262.09.
About 483 million shares changed hands on the New York Stock Exchange, with advancers outnumbering decliners 1,315 to 1,201.
A Merrill Lynch & Co. analyst said that overall demand from computer customers appears to be very strong in a seasonably slow quarter for the computer industry, and predicted Intel would hit $200 by year-end.
Computer networking stocks like 3Com Corp. and Cisco Systems Inc. advanced after diving in recent days amid concern that revenue and profit growth is slowing. 3Com rose 25 cents to $37.50 after dropping $13.50, or 27 percent, Monday. Cisco, which accounts for 80 percent of network router sales, rose $2.5625 to $60.5625.
Intel Corp. closed unchanged at $151.75, rebounding from a $5.25 drop.
Motorola Inc., which makes both semiconductors and cellular telephones, fell $4 to $63.50 after the Wall Street Journal said the company's best years may be behind it. Competitors Nokia AB and LM Ericsson released digital phones last fall that took market share from Motorola.
Innotech Inc. shares rose $4.640625 to $13.525625 after Johnson & Johnson said it will buy the maker of equipment to make eyeglass lenses for $13.75 a share, or $123.8 million.
Johnson & Johnson rose 37.5 cents to $60.
Trading in Centennial Technologies Inc. shares was halted after the personal computer equipment maker said it fired Chairman and Chief Executive Emanuel Pinez and began an investigation into the accuracy of its financial statements. The stock fell to $16.50 Monday from $55.50 at the end of the year.
America Online Inc. fell $1 to $33.75 after America's No. 1 online service reached a final settlement with 44 states to offer refunds to users who experienced problems logging on.