WorldCom's bid for MCI sends stocks higher Dow closes above 8,000 for first time since August

lower rates also give boost

October 02, 1997|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks gained yesterday after WorldCom Inc. offered to buy MCI Communications Corp. for $34.5 billion, spurring optimism that takeovers will continue to drive share prices higher.

WorldCom's offer is the largest ever in the United States.

The Dow Jones industrial average rose 70.24 to 8,015.50, its first close above 8,000 since Aug. 20. The 30-stock average is still 244 points below its all-time high set Aug. 6.

Falling interest rates also gave stocks a lift. The yield on the benchmark 30-year Treasury bond dropped to 6.31 percent from 6.39 percent, a day after the Federal Reserve elected to leave interest rates unchanged. Also, a report from the National

Association of Purchasing Management showed the economy is growing slowly enough to keep inflation at bay.

Among broad market indexes, the Standard & Poor's 500 index climbed 8.13 to 955.41. Telephone shares paced the advance, as GTE Corp. climbed $1.50 to $46.875; BellSouth Corp. climbed $1.125 to $47.375; and SBC Communications Corp. added 81.25 cents to $62.25. The Nasdaq composite index rose 4.61, or 0.3 percent, to 1,690.30.

The Russell 2,000 index of small capitalization stocks rose .87 to 454.69; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq stock exchanges, added 62.60 to 9,242.81; and the American Stock Exchange composite index advanced 4.01 to 703.27. All were records.

The S&P 400 midcap index gained 1.01 to 332.67.

Some 1,927 stocks rose and 997 fell on the New York Stock Exchange, where about 600 million shares changed hands. The three-month daily average volume on the Big Board is 529 million shares.

MCI rose $5.875 to $35.25. WorldCom fell $1 to $34.375 in trading of 67.9 million shares, making it the third most active issue in Nasdaq history among non-penny stocks. British Telecom's American depositary receipts jumped $5.375 to $72.

Other telecommunications shares rose on speculation that they might be next in the takeover wave. Sprint Corp. rose $2.125 to PTC $52.125. Teleport Communications Group Inc., which has a fiber-optic network for Internet and local service, jumped $3.75 to $4.625. Primus Telecommunications Group Inc. soared $2.625 to and Winstar Communications Inc. rose $2.0625 to $21.25.

MCI wasn't the only target of WorldCom yesterday. Brooks Fiber Properties Inc. rallied $8 to $54.6875 after WorldCom agreed to buy the local phone company for $2.9 billion, or $58.37 a share.

Stocks fell yesterday after Ascend Communications Inc. and Western Digital Corp. warned of disappointing profits in the latest quarter. More companies joined the list yesterday. Among them, Imation Corp., a maker of data-storage products, fell $2.3125 to $24.25; computer circuit-maker Hadco Corp. slid $4.40625 to $49.75; TriQuint Semiconductor Inc. plunged $8.4375 to $28; and Advanced Micro Devices Inc. slipped $5.5625 to $27.

The Morgan Stanley high-tech index slipped 6.80 to 513.60, as America Online Inc. fell $2.375 to $73.0625, IBM dropped $2.50 to $103.50, Hewlett-Packard Co. dropped $1.25 to $68.3125 and Sun Microsystems Inc. fell $1.4375 to $45.375.

Jones Apparel Group Inc. was an exception to the gloomy earnings outlook, rising $2.625 to $56.625 after disclosing that it expects a third-quarter profit of 86 cents to 88 cents a share, exceeding analyst projections.

Yesterday's most actively traded issues in the United States were WorldCom, MCI, Intel Corp., Brooks Fiber and Tellabs Inc.

Cigna Corp. ended down $6 to $180.25 after being halted before the regular close. The insurer said it expects third-quarter earnings to fall short of analyst estimates because of higher-than-expected medical costs.

Actel Corp. dropped $2.25 to $17.

The specialized computer-chip maker said third-quarter revenue fell about 6 percent from the second quarter because of problems with one product and a delay in the shipment of another.

Pub Date: 10/02/97

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