Computer, bank firms lead rally by stocks Dow gains 53 points amid optimism about first-quarter returns

April 09, 1997|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks rose yesterday, led by Microsoft Corp. and NationsBank Corp., amid optimism that computer and banking companies will record the biggest earnings gains in the first quarter.

A late-day surge sent the Dow Jones industrial average up 53.25 to 6,609.16, its third straight gain after an 8.5 percent slide beginning in late March. International Business Machines Corp. led the advance, rising $4.125 to $136.625.

"Both banks and computer companies got knocked down very hard recently, but long term they still look good," said Robert Stovall, president of the $1 billion Stovall/Twenty-First Advisers.

Stocks got a boost after Goldman, Sachs & Co.'s chief investment strategist Abby Joseph Cohen reiterated her optimistic stance on U.S. stocks. She named Citicorp, Chase Manhattan Corp., Intel Corp. and Microsoft as some of her favorites.

The Standard & Poor's 500 index rose 3.99 to 766.12 and the Nasdaq composite index rose 6.02 to 1,257.37.

The Russell 2,000 index of small capitalization stocks gained 1.06 to 345.97; the Wilshire 5,000 index of stocks on the New York, American and Nasdaq exchanges rose 32.78 to 7,305.75; the American Stock Exchange composite index climbed 0.98 to 561.42; and the S&P midcap index added 0.78 to 255.84.

The Philadelphia semiconductor index rose 5.45 -- almost 2 percent -- to a 52-week high of 297.26. The price-weighted index of 16 companies is up 11.7 percent in just five days. Leading that index higher, Teradyne Inc. rose $2.875 to $36.125 after the test equipment and software supplier said Harris Corp.'s chip unit placed an order for test systems.

Texas Instruments Inc. gained $3.50 to $88.875. It plans to sell some or all of a stake in Actel Corp. that it acquired by selling Actel its programmable logic chip business in 1995.

Bank shares advanced amid optimism that interest rates won't rise much further and cut into profit growth. The Keefe, Bruyette & Woods bank index rallied 12.21, or 2.1 percent, to 582.91 -- its biggest one-day gain since March 24, the day before the Federal Reserve raised lending rates.

NationsBank Corp. jumped $2.375 to $58.625; Citicorp rose $2.75 to $114.75; BankAmerica Corp. rallied $2.375 to $107.25; Chase Manhattan Corp. climbed $2.625 to $96.875; and First Union Corp. surged $2.25 to $84.25.

Advanced Micro Devices Inc. closed up 37.5 cents to $43.375. The chip maker reported profit of 9 cents a share, surprising analysts who had forecast a 2 cents-a-share loss. The company said earnings were led by sales of its flash-memory chips, which are used in portable computers, and sales of its K5 processor, which competes against Intel Corp.'s.

Motorola Inc. fell $1.625 to $59.50 after saying losses in Iridium LLC will widen by "several hundred million dollars in 1997" as it gets closer to introducing its satellite telecommunications service next year. Motorola owns 24 percent of Iridium.

Earlier, Motorola reported earnings were 6 cents a share better than what analysts expected for the maker of semiconductors and cellular phones. But orders were less than expected in the first quarter.

The robust economy benefited automakers. General Motors Corp. rose 62.5 cents to $54.625 and Ford Motor Co. gained 37.5 cents to $32 after the Wall Street Journal reported that strong first-quarter sales and plans to increase vehicle production have prompted some analysts to raise earnings estimates.

The yield on the 30-year Treasury bond rose 4 basis points to 7.10 percent.

Viking Office Products shares were the most active in U.S. markets, dropping $5.50 to $14.50 after the Los Angeles office products seller said it expects lower-than-expected earnings. The company cited falling prices for paper, as well as the rising dollar, which climbed to a 4 1/2 -year high against the yen.

Pub Date: 4/09/97

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