Stocks Rebound

Dow Up 44 Points

Fed-watchers Decide Rates Might Not Be Boosted May 20

April 29, 1997|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks rose yesterday for the first time in four days as some investors speculated that the Federal Reserve won't raise interest rates next month.

The central bank had been expected to raise rates to slow the economy, which would undermine corporate profits.

"There was a bit of a psychological turn," said Jim Weiss, deputy chief investment officer for equities at State Street Research. Weiss said a report out yesterday that new-homes sales slowed in March "shows weakness, not strength," and boosted optimism that rates may not be headed higher.

The Dow Jones industrial average rose 44.15 to 6,783.02. The Standard & Poor's 500 index rose 7.59 to 772.96 and the Nasdaq composite index gained 7.74 to 1,217.03. Advancers outnumbered decliners by 13 to 11 in trading of 403 million shares, less than the three-month average volume of 492 million.

On the broader market, the Russell 2,000 index of small capitalization stocks rose 0.25 to 336.10; the Wilshire 5,000 index rose 57.723 to 7,274.231; the American Stock Exchange composite index fell 1.63 to 541.20; and the S&P mid-cap index rose 1.50 to 249.54.

To be sure, investors remain anxious about the prospect of interest rates rising further. Although yields on the benchmark 30-year U.S. Treasury bond fell 3 basis points yesterday, to 7.11 percent, they remain near eight-month highs. Investors are concerned that forthcoming reports will indicate that the economy is growing so fast that the Fed will feel obliged to raise rates to stifle inflation.

Sales of new homes slid 2.5 percent in March to a seasonably adjusted rate of 813,000, according to the Commerce Department.

The government reports on labor costs today, gross domestic product growth tomorrow and job growth Friday.

Boeing Co. bucked the trend, falling $6.625 to $95.375. The world's No. 1 aerospace company said first-quarter profit fell short of forecasts as it stepped up production -- by increasing hiring and overtime -- to meet soaring demand for jetliners.

American Express rose $3 to $64.125 on a report that its credit card business is growing faster than its competitors'. Last week American Express reported first-quarter earnings that exceeded analysts' expectations.

Giddings & Lewis Inc. jumped $6.73 to $20.36 after Harnischfeger Industries Inc. launched an unsolicited tender offer to acquire the maker of automated tools in a transaction valued at $631 million. Harnischfeger fell $3.125 to $42.25.

Dell Computer Corp. rose $1.1875 to $78.9375, and Compaq Computer Corp. gained 62.5 cents to $79.25 after a market research firm said worldwide personal computer growth accelerated. International Data Corp. said the PC market grew 16 percent in the first quarter, up from 13 percent a year earlier.

McDermott International Inc. didn't open for trading after the energy services company said it will report a loss of $90 million in the latest quarter. It also said it's looking into allegations of wrongdoing by former employees.

Nike Inc. fell $2.75 to $53.375 after Hambrecht & Quist analyst Shelly Hale Young downgraded the stock to "hold" from "buy," and lowered an estimate of fiscal 1998 U.S. footwear sales growth to between 4 percent and 5 percent, from 10 percent.

AirTouch Communications Inc. jumped $1.125 to $24.75, after it said first-quarter profit rose 23 percent as the company added more cellular and paging customers. Earnings per share rose to 13 cents a share, 2 cents above expectations.

Clarify Inc. jumped $1.72 to $9.22 on four times its average daily volume on optimism that the maker of computer networking software is poised to rebound. The company announced a $1 million contract to supply Toyota Motor Corp. with software.

Pub Date: 4/29/97

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