Dow leaps 111 points on growth report Tame inflation underlines economic advance

index gain is highest in 4 weeks

Wall Street

May 01, 1998|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks rallied again yesterday, sending the Dow Jones industrial average to its biggest gain in four weeks, after reports showing fast economic growth with little inflation made it more likely that interest rates will remain tame and earnings robust.

General Electric Co., Coca-Cola Co. and Merck & Co. led an advance that enabled the Standard & Poor's 500 index to finish April with a 1 percent gain rather than a 0.7 percent loss.

The 30-stock Dow average rallied 111.85 to 9,063.37. Merck led the way, rising $4.50 to $120.50. The S&P 500 gained 17.14 to 1,111.77, and the Nasdaq composite index jumped 16.77 to 1,868.41.

Among other broad market indexes, the Russell 2,000 index of small capitalization stocks rose 5.91 to 482.89; the Wilshire 5,000 index gained 153.91 to 10,609.61; the American Stock Exchange composite index climbed 4.20 to 746.92; and the S&P 400 midcap index added 4.92 to 375.39.

The Bloomberg Maryland index, which tracks the top 100 stocks in Maryland by market valuation, jumped 3.32 to 238.70.

Stocks rallied as the yield on the benchmark 30-year Treasury bond fell 13 basis points to 5.94 percent. The government said labor costs for U.S. businesses rose at a slower-than-expected pace of 0.7 percent in the first quarter and that gross domestic product -- the total output of goods and services -- rose at a 4.2 percent annual rate.

Among financial stocks, BankAmerica Corp. jumped $3.375 to $85.375; Citicorp rose $1.75 to $150.50; Travelers Group Inc. added 50 cents to $61.1875; and Morgan Stanley Dean Witter & Co. rose $2.1875 to $78.875.

Yesterday's rally spread to overseas markets. Britain's FT-SE 100 Index rose 1.6 percent, France's CAC 40 Index jumped 3.9 percent and Germany's DAX Ibis Index gained 3.1 percent.

A sign that U.S. investors don't expect interest rates to rise much was indicated by the performance of utilities stocks.

Columbia Energy Group rose 3 to 81.25, Peco Energy Co. gained 1.6875 to 23.8125, American Electric Power Co. jumped 1.125 to 47.75 and Duke Energy Corp. climbed 1.1875 to 57.875.

Texas Utilities Co. rose 93.75 cents to $40 after the company won the battle for the United Kingdom's Energy Group PLC. PacifiCorp said it won't top the 6.3 billion pounds ($10.4 billion) offer of its Dallas-based rival.

Yesterday's rally made the nation's second-richest man richer. Warren Buffett, chairman of Berkshire Hathaway Inc., saw his stake in the Omaha, Neb.-based investment company rise in value by $287 million to $32.8 billion. Berkshire's stock climbed $600 to $68,600 a share.

Food stocks rose, boosted by unexpectedly strong sales at Nestle SA, the world's largest food maker. Hershey Foods Corp. rose $2.375 to $73.25; Sara Lee Corp. rose $1.50 to $59.50; and Conagra Inc. rose $1.125 to $29.1875.

Coca-Cola, the third-biggest stock in the S&P 500, rose $2.1875 to $75.875.

H. J. Heinz Co. rose $1.1875 to $54.50 after the company named William Johnson as president and chief executive. Also, analysts at Merrill Lynch & Co. said the company's flagship ketchup business is strong and steadily increasing.

Pub Date: 5/01/98

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