Dow rises 56 points as rates worry ebbs Report on tame inflation eases investors' anxiety about Fed taking action

March 15, 1997|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks rebounded yesterday from Thursday's tumble, after an encouraging inflation report quelled concern that the Federal Reserve will boost interest rates this month. Shares of Oracle Corp. and Procter & Gamble Co. rallied.

The Labor Department said prices paid to U.S. factories and other producers unexpectedly fell 0.4 percent last month, the second straight drop. Investors said stable interest rates would brighten the outlook for corporate profits and share prices this year.

The Dow industrials rose 56.57 to 6,935.46, a day after sliding 160 points, their biggest drop in eight months. Among the 30-stock average's gainers, P&G jumped $4.625 to $125.75; Philip Morris Cos. rose $3 to $129; and Walt Disney Co. climbed $1.50 to $74.75.

The Standard & Poor's 500 index rose 3.61 to 793.17, recouping half of Thursday's 14.70-point slide. The Nasdaq composite index fell 0.31 to 1,292.97, hurt by a late drop in Microsoft and Intel Corp., down $3.375 to $137.875.

Merck & Co., one of the Dow industrials, fell $2.125 to $88.375 on apprehension about a study to be published in the medical journal Lancet tomorrow about its hypertension drug Cozaar.

Employee Solutions Inc., which helps companies manage employee benefits and salaries, was the U.S. markets' most active stock, tumbling $9.125 to $6.25 in trading of 30.2 million shares. The company delayed releasing fourth-quarter earnings and said the results would fall below expectations.

After Employee Solutions, yesterday's most active stocks in U.S. composite trading were Oracle, Cisco Systems, Micron Technology and Intel Corp.

The Russell 2,000 index of small capitalization stocks rose 0.98 to 361.04; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq stock exchanges, rallied 27.80 to 7,580.93; the American Stock Exchange composite index climbed 2.45 to 600.47; and the S&P 400 midcap index jumped 1.13 to 264.27.

Stable bond yields helped spur the advance. The yield on the benchmark 30-year Treasury bond fell to 6.94 percent from 6.95 percent Thursday.

For the week, the Dow industrials lost 0.9 percent, the S&P 500 fell 1.5 percent and the Nasdaq composite lost 1.4 percent.

Shares of software companies gained after bellwether Oracle said third-quarter profit from operations rose 32 percent, meeting forecasts. Indications that European sales are improving soothed concern that problems in Europe would hurt 1997 results. Oracle rose 4.875 to 41, its highest in more than two weeks.

Signs that businesses and consumers are spending more than forecast raises the chances that sales at Microsoft Corp., Peoplesoft Inc. and others will top forecasts, analysts said.

Computer Associates International Inc. jumped $2.125 to $41.75; Autodesk Inc. gained $1.125 to $34.50; and Peoplesoft rose 62.5 cents to $42.875. Microsoft fell 62.5 cents to $99 in a late-day slump.

Retailer Wal-Mart Stores Inc., which will become one of the 30 Dow industrials on Monday, fell 25 cents to $28.75 as retailers slumped late in the day. Among the others that will be added, Hewlett-Packard Co. fell 25 cents to $55.375; Johnson & Johnson fell $1.125 to $57.625; and Travelers Group Inc. gained 37.5 cents to $53.25.

Woolworth Corp. rose 87.5 cents to $23.125 on its last day as a Dow stock. The day also was good for the other three soon-to-be ex-Dow members: Bethlehem Steel Corp. rose 12.5 cents to $8.50; Texaco Inc. gained 62.5 cents to $101.25; and Westinghouse rose 37.5 cents to $19.25.

Exxon Corp. jumped $1.125 to $101.125 after the oil and natural gas company said it will build a $2 billion chemical plant in Singapore to meet surging demand for plastics in Asia.

Advanced Micro Devices Corp. dropped $2.875 to $44.50 and Cyrix fell 12.5 cents to $22.125 after Intel sued them for alleged infringement on an Intel trademark.

Pub Date: 3/15/97

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