Bond rally spurs hopes for profit, lifts stocks Wal-Mart leads retailers higher

S&P 500 rises 9.15, Dow gains 70.25

May 13, 1998|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks rose yesterday as a late-afternoon rally in bonds sparked optimism that low interest rates will spur profit growth this year. Wal-Mart Stores Inc. led the gain after reporting a stronger-than-forecast profit.

The Dow Jones industrial average rose 70.25, to 9,161.77. The Standard & Poor's 500 index climbed 9.15, to 1,115.79, led by Wal-Mart, up $1.625, to $52.75, and the Nasdaq composite index gained 12.09, to 1,860.16.

Among other broad market indexes, the Russell 2,000 index of small capitalization stocks fell 0.77, to 476.13; the Wilshire 5,000 index gained 54.10, to 10,602.71; the American Stock Exchange composite index slipped 0.45, to 743.58; and the S&P 400 midcap index added 0.46, to 372.79.

The Bloomberg Maryland index, which tracks the top 100 stocks in Maryland by market valuation, lost 0.01, to 239.45.

The yield on the benchmark 30-year Treasury bond fell 6 basis points to 5.97 percent as an auction of debt by the government met unexpected demand.

Some eight shares fell for every seven that rose on the New York Stock Exchange. About 602 million shares changed hands on the Big Board, up from 558 million yesterday.

Young & Rubicam Inc. gained $3.0625, to $28.0625, in trading of 11.6 million shares. The nation's largest advertising and marketing company sold stock for the first time, hoping to take advantage of growing demand for advertising in a robust economy where demand for U.S. goods and services is brisk.

Another IPO, Internet access company Verio Inc., rose $4.0625, to $27.0625, after its $126.5 million offering.

Retailers rose after Wal-Mart said it earned 37 cents a diluted share in the quarter ended April 30, topping analysts' forecasts for 34 cents. Dayton Hudson Corp. rose $1.25, to $44; TJX Cos. gained $2.125, to $48.6875; Ames Department Stores Inc. gained $1.4375, to $25.625; and Sears, Roebuck & Co. gained $2.5625, to $61.4375.

Paper makers gained after Merrill Lynch & Co. raised its investment recommendation on Boise Cascade Corp., Willamette Industries Inc. and Jefferson Smurfit Corp. The latter company's plan to acquire Stone Container Corp., announced Monday, would create the world's largest paper-packaging company.

Jefferson Smurfit rose 65.625 cents, to $21.71875; Boise Cascade added 81.25 cents, to $37.75; Willamette climbed 25 cents, to $39.375; and International Paper Co. jumped $1.25, to $54.25.

About $918 billion worth of mergers have been announced this year, including five of the 10 biggest transactions in history.

SBC Communications Inc. rose 62.5 cents yesterday to $39.4375 and GTE Corp. gained 31.25 cents, to $59.50. SBC's $65.4 billion acquisition of Ameritech Corp., announced Monday, would be the second-largest in history, behind last month's $70.3 billion merger between Travelers and Citicorp. Ameritech fell 37.5 cents yesterday to $45.625, a day after rallying $2.125, to $46.

Nike Inc. rose $2, to $47.4375. The company unveiled a plan to improve working conditions at its factories worldwide, especially in Asia, after months of criticism.

Microsoft rose $1.4375, to $85.6875, after earlier falling as low as $83.25. Sun Microsystems gained 68.75 cents, to $41.8125.

The bond market's rally after the sale of $10 billion of three-year notes was good news for banks. NationsBank Corp. rose $3.25, to $76.8125; BankAmerica Corp. rose $3.25, to $85; Travelers Group gained $1.25, to $61.9375; Citicorp gained $2.125, to $152.125; and Chase Manhattan Corp. gained $1.9375, to $140.50.

Yesterday's most active stocks in U.S. trading were 3Com Corp., Dell Computer Corp., Microsoft Corp., Compaq Computer Corp. and Biocontrol Technology Inc.

Biocontrol Technology rose 6.25 cents, to 18.75 cents, in Nasdaq trading of 12.2 million shares. The company is attempting to get clearance to sell its Diasensor 1000, a blood sugar measurement device, in Europe.

Pub Date: 5/13/98

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