Stocks hit new highs Dow rises 116 points

Other market indexes also close at records

banks' shares strong

Wall Street

March 17, 1998|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks rose to records again yesterday, led by banks, on optimism that mergers and lower bond yields will keep share prices climbing.

J. P. Morgan & Co. led the Dow Jones industrial average above 8,700 for the first time, after an analyst said the bank will be sold within the next year. It has a market value of $22.9 billion, so a sale would be the biggest in U.S. banking history.

All three major indexes set records. The Dow rose 116.33, or 1.4 percent, to 8,718.85; the Standard & Poor's 500 index rose 10.68 to 1,079.27; and the Nasdaq composite index gained 16.52 to 1,788.18.

Among other broad market indexes, the Russell 2,000 index of small capitalization stocks rose 2.99 to a record 471.76; the Wilshire 5,000 index climbed 86.79 to a record 10,283.95; the American Stock Exchange composite index gained 2.33 to 718.14; and the S&P 400 mid-cap index added 1.58 to 362.86, also a record.

The Bloomberg Maryland index, which tracks the top 100 stocks in Maryland by market valuation, rose 2.79 to 234.13, its seventh straight record.

The Dow Jones transportation average rose 75.12, or 2.1 percent, to a record 3,623.57, led by airlines, which stand to benefit from cheaper fuel. AMR Corp., the parent of American Airlines, rose $4.6875 to an all-time high of $146.25. US Airways Group Inc. rose $1.625 to $76, also a record.

Rising stocks outnumbered decliners on the New York Stock Exchange by a 3-to-2 ratio. The NYSE composite index rose 4.77 to a record 561.94.

Bank stocks rose after UBS Securities analyst Thomas Hanley predicted that J. P. Morgan would be taken over and that the stock could reach 175 within 12 months. J. P. Morgan rose $5.125 to $130.125.

Chase Manhattan Corp. rose $3.0625 to $128.3125, and BankBoston Corp. gained $4.125 to $106.375.

Optimistic comments by billionaire investor Warren Buffett also drove the market higher. In his company's annual letter to shareholders, he said the market rally is justified because of low interest rates and "exceptionally high" profit margins.

Buffett sold some of his holdings in Walt Disney Co., Wells Fargo & Co. and Freddie Mac.

Disney rose $3.625 to $109.625; Wells Fargo rose $6.125 to $325.625; and Freddie Mac fell 18.75 cents to $49. McDonald's Corp. fell $1.625 to 53 after the fast-food chain, one of Buffett's biggest holdings at the end of 1996, was absent from the list of his largest investments.

Stocks that Buffett didn't cut from his list rose. Coca-Cola Co. gained $1.1875 to $71.75 and American Express Co. rose $1.6875 to $93.9375. Berkshire Hathaway Class A shares rose $1,900 to $61,200.

American Bankers Insurance Group Inc. rose $3.75 to $65.75 after Cendant Corp. increased its offer to buy the company, part of a takeover battle with American International Group Inc. for the Miami-based credit insurer. Cendant boosted its offer to $67 a share from $58. Cendant fell 18.75 cents to $40.625 and AIG rose $2.9375 to $127.125.

CapStar Hotel Co. fell $1.50 to $34.25 and American General Hospitality Corp. rose 12.5 cents to $27.0625 after they said they would merge to create a $3 billion hotel real estate investment trust, or REIT. CapStar will spin off its hotel-management business.

Aetna Inc., one of the largest health insurance companies in the U.S., rose 25 cents to $84.5625 after it agreed to buy New York Life Insurance Co.'s health insurance business for $1.05 billion in cash.

360 Communications Co. fell $4.375 to $31.25 after Alltel Corp. said it agreed to buy the wireless phone company for $5.89 billion in stock and assumed debt to expand its wireless-telephone business in the Southeastern U.S. Alltel fell 93.75 cents to $44.875.

Stocks got a boost from gains in Treasuries. The yield on the 30-year bond fell 3 basis points to 5.86 percent.

Pub Date: 3/17/98

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