NEW YORK -- U.S. stocks rallied yesterday, sending the Dow Jones industrial average to a record, as shares of Exxon Corp., Merck & Co. and General Electric Co. surged on expectations that they will fulfill 1997 earnings forecasts.
The Dow industrials rose 78.50 to 7,079.39, eclipsing its previous high of 7,067.46 set Feb. 18.
The Standard & Poor's 500 index rose 8.68 to 813.65 and the Nasdaq composite index climbed 10.92 to 1,322.72. Both indexes were helped by Microsoft Corp., which rose $3.25 to $100, and Intel Corp., up $1.25 to $144.75.
On the broader market, the Russell 2,000 index of small capitalization stocks gained 1.63 to 367.09; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq exchanges, spurted 69.93 to 7,757.04; the American Stock Exchange composite index climbed 1.57 to 603.63, its high this year; and the S&P midcap index added 1.35 to 267.77.
About 1,643 stocks rose and 868 shares fell on the New York Stock Exchange, where 458.8 million shares changed hands.
Shares continued to get a boost from comments made by Federal Reserve Chairman Alan Greenspan last week that stocks aren't overvalued so long as profits live up to expectations. The march to records comes less than three weeks after many investors were predicting an end to the market's two-year rally.
Drug companies were among the day's biggest gainers. Merck's annual sales have risen every year since 1987 and were up 19 percent last year. The American Stock Exchange pharmaceutical index climbed 10.20 to 425.66.
Among drugmakers, Merck climbed $2.375 to $95.375; Pfizer Inc. rallied 42.75 to $96.875; Warner-Lambert Co. rose $5 to $88.50; Schering-Plough Corp. rose $2.375 to $81.625; and Eli Lilly & Co. rose $2.50 to $91.50.
Along with Merck, Dow gainers included Procter & Gamble Co., which jumped $4.25 to $124.75; Exxon, up $2.625 to $103; and Philip Morris Cos., up $2.75 to $138.75. Philip Morris rallied for a second day after competitor RJR Nabisco Holdings Corp. said it would raise cigarette prices.
General Electric Co. rose 50 cents to $105.875 after executives told investors in Singapore that they expect 1997 earnings to reach the high end of analysts' expectations. GE also agreed to buy Greenwich Air Services Inc. and UNC Inc. for $875 million in cash and stock, making it the leader in servicing corporate jet engines.
Corning Inc. surged $4.75 to $43.875 yesterday. Corning said late Friday that it expects first-quarter per-share earnings to rise 40 percent and top estimates.
Shares of health care products companies gained after a new study from the Johns Hopkins University said some commonly used pain medications appear to reduce the risk of developing Alzheimer's disease.
American Home Products Corp., the maker of Advil, rose 87.5 cents to $67.625 and Bristol-Myers Squibb Co., which makes Nuprin, climbed $1.125 to $67.875. Procter & Gamble Co., maker of Aleve, rallied $4.25 to $124.75.
Texas Instruments Inc. rose $1.375 to $85.25 after Goldman, Sachs & Co. raised its estimate for 1997 earnings to $3.60 a share from $3.25. Last week, TI predicted global semiconductor sales will rise 10 percent this year.
CNS Inc. shares fell $1.875 to $9.375 after the maker of Breathe Right nasal strips said it expects first-quarter net income to be "significantly below" analysts' estimates of 23 cents a share.
CV Therapeutics Inc. rose $1.875 to $10 after the development-stage drugmaker said it will receive $16 million from Biogen Inc. for rights to a drug to ease fluid retention in patients with congestive heart failure. Biogen rose 31.25 cents to $48.5625.
Netscape Communications Corp. rallied $3.125 to $29.625 after the company said it plans to provide Internet software to businesses that will let them share information on their computer networks with customers.
Pub Date: 3/11/97