Stock Surge Propelled By Rates, Earnings

Procter & Gamble And Ge Are Standouts In Dow's 173-point Rise

April 23, 1997|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks' strong performance yesterday was fueled by falling interest rates and unexpectedly strong earnings. The Dow Jones industrial average logged its biggest percentage gain since 1991.

Helping stocks were better-than-expected profit reports from large corporations such as Minnesota Mining & Manufacturing Co., UAL Corp. and Bristol-Myers Squibb Co.

"So many growth companies reported strong earnings, and many of them have fallen 10 percent to 15 percent in the past couple weeks," said Mike McDermott, a money manager at National City Asset Management Group, which oversees $9 billion. "That's attracting a lot of money."

The Dow jumped 173.38, or 2.6 percent, to 6,833.59 -- its second biggest point gain ever, although it didn't come near the top 10 up days in percentage terms. The biggest point gain occurred Oct. 21, 1987, when the 30-stock average rallied 186.84.

In the past seven sessions, the Dow average has advanced 6.9 percent, and is just 251 points below its March 11 record.

Procter & Gamble Co. was the biggest gainer among the 30 Dow stocks, rising $5.625 to $128.625. The maker of Pampers and Pringles announces quarterly profits tomorrow. Also higher were General Electric Co., up $4.125 to $108.50, and Coca-Cola Co., up $3.25 to $61.875.

"Investors are buying the big caps, the companies that will surprise them the least," said Gene Grandone, director of investment counseling at Northern Trust Co. in Chicago, which oversees $130 billion and owns shares of Procter & Gamble. "I can wake up tomorrow and not worry about finding P&G and Coke down 20 percent."

A midafternoon decline in bond yields helped stocks. The yield on the benchmark 30-year Treasury bond fell 5 basis points to 7.04 percent, its lowest level since March 26. The decline came after a government auction of two-year notes met with unexpectedly strong demand.

The Standard & Poor's 500 index rose 14.24, or 1.9 percent, to 774.61. The Nasdaq composite index climbed 8.79, or 0.73 percent, to 1,212.74, overcoming a 9.79-point loss. About three stocks rose for every two that fell. Some 498 million shares changed hands, about average for the past three months.

On the broader market, the Russell 2,000 index of small capitalization stocks fell 0.18 to 338.09; the Wilshire 5,000 index rose 101.369 to 7,300.287; the American Stock Exchange composite index fell 6.51 to 544.96; and the S&P mid-cap index rose 1.88 to 250.20.

The Bloomberg Maryland stock index, a price-weighted list of companies with operations in the region, rose 1.09, to 150.11.

Pub Date: 4/23/97

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