Low yields on bonds send stocks climbing Dow rises to 7,978.99

financial shares do well, oil issues stumble

January 06, 1998|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks rose yesterday, as record low yields on benchmark U.S. 30-year bonds boosted Merrill Lynch & Co., J. P. Morgan & Co. and other financial shares.

A slide in Chevron Corp. and other oil issues tempered the advance.

The yield on the 30-year bond dropped 8 basis points to 5.74 percent, the lowest since the Treasury began regular sales in 1977. Federal Reserve Chairman Alan Greenspan suggested Saturday that the central bank's next move could be to lower interest rates, which investors said will help boost the appeal of stocks if weak overseas economies dent U.S. profit growth.

"Lower interest rates justify higher share prices," said Timothy O'Grady, a money manager at First Capital Group, a unit of First Union National Bank with about $20 billion in assets.

The Dow Jones industrial average rose 13.95 to 7,978.99. The 30-stock average traded as high as 8,035.54. J. P. Morgan, the most heavily weighted stock in the average, gained $4, to $116.

The broader Standard & Poor's 500 index rose 2.07 to 977.07, and the Nasdaq composite index climbed 12.59 to 1,594.12.

Among other broad market indexes, the Russell 2,000 index of small capitalization stocks added 0.54 to 437.06; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq stock exchanges, climbed 47.06 to 9,345.25; the American Stock Exchange composite index slid 2.41 to 680.13; and the S&P 400 midcap index gained 1.29 to 333.39.

The price of oil fell below $17 a barrel, its lowest price in more than two years, as warmer weather nationally reduced demand for heating fuels.

Chevron, off $2.25 to $75.6875, and Exxon, down 68.75 to 61.1875, ranked among the Dow's top five decliners. Mobil Corp. fell $1.5625 to $70.75; Texaco Inc. slid 75 cents to $52.75; and Royal Dutch Petroleum Co. lost $1.3125 to $54.3125.

Some 1,654 stocks rose and 1,416 declined on the New York Stock Exchange. About 626 million shares changed hands, making this the busiest day since Dec. 19, when 783 million shares traded.

Merrill Lynch rose $2.125 to $73.625; Citicorp climbed 62.5 cents to $130.375; Morgan Stanley, Dean Witter, Discover & Co. jumped $2.125 to $60.875; Paine Webber Group Inc. jumped $1.375 to $35.1875; and Chase Manhattan rose $1.8125 to $112.4375.

Bankers Trust New York Corp. rose $2.3125 to $115.25; NationsBank Corp. rose $1.6875 to $62.4375; and Bank of New (( York Co. jumped $1.375 to $58.5625.

Sun Microsystems Inc. rose $1.75 to $43.25. The stock may rise 50 percent this year after withstanding Microsoft Corp.'s entry three year ago into the computer networking software market, according to Goldman Sachs & Co. technology analyst Laura Conigliaro, Barron's reported.

Semiconductor shares gained, extending a five-day rally. Dataquest, a San Jose, Calif.-based research firm that specializes in the computer industry, estimated that the industry's revenue reached $150 billion last year.

Intel jumped $1.875 to $74.50 in trading of 19.6 million shares; Texas Instruments Inc. rose 50 cents to $48.3125; and Applied Materials Inc. rose $2.125 to $33.125.

Netscape Communications Corp. fell $4.8125 to $18.5625 in trading of 13.9 million shares, making it the second most-active stock behind Intel Corp. Netscape said it lost money in 1997 as rival Microsoft Corp. gained market share, sending its shares to their lowest since the Internet software company went public.

ConAgra Inc. fell $2.375 to $30.8125 on concern that falling beef prices and the Hong Kong poultry virus may cause the food- products company's earnings growth to drop into single digits. Nomi Ghez of Goldman, Sachs & Co. removed ConAgra from the firm's "recommend list," lowering her opinion to "market perform."

Intel, Netscape, Applied Materials, Compaq Computer Corp. and Cisco Systems Inc. were the most active stocks in U.S. trading.

Pub Date: 1/06/98

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