Computer stocks lead advance Microsoft passes $100 after appellate ruling

Dow, Nasdaq surge

June 24, 1998|By BLOOMBERG NEWS

NEW YORK -- U.S. stocks rose yesterday as investors poured money into computer companies for a second day on expectations that demand for their products will revive in the second half.

Microsoft Corp. led the gains, after the No. 1 personal computer software maker won a round in court with federal antitrust officials.

The Dow Jones industrial average rose 117.33 points to 8,828.46, led by computer maker International Business Machines Corp., up $3.625 to $111.75 on Microsoft's coattails.

The Standard & Poor's 500 index gained 16.25 to 1,119.49 and the Nasdaq composite index, heavily weighted with computer stocks, surged 38.75 to 1,844.57.

Among other broad market indexes, the Russell 2,000 index of small capitalization stocks rose 5.77 to 447.42; the Wilshire 5,000 index gained 137.40 to 10,502.79; the American Stock Exchange composite index climbed 4.61 to 698.60; the S&P 400 midcap index added 3.36 to 355.71; and the NYSE Composite Index gained 6.75 to 571.63.

The Bloomberg Maryland index, which tracks the top 100 stocks in Maryland by market valuation, gained 2.08 to 231.01.

Advancing issues led decliners on the New York Stock Exchange by a 3-to-2 ratio. Volume on the Big Board was 657.1 million shares, above the average 607 million shares in the past three months.

Microsoft jumped $4.9375 to a record $100.75 after a federal appeals court in Washington reversed a lower court's order and said the company can require PC makers to install its Windows 95 operating system already bundled with the Internet Explorer Web browser. More than 31 million shares changed hands, making Microsoft the most active issue in U.S. trading.

Intel added $1.375 to $75.25; Dell Computer Corp. gained $5.25 to $93.125; and Cisco Systems Inc. rose $2.25 to $86.875. Seven of the 10 most active stocks in U.S. trading yesterday were related to computers or telecommunications equipment.

America Online Inc. rose $5.125 to $106.25 and Yahoo! Inc. soared $8.50 to $148.0625 on speculation that AOL or another Internet provider would be added to the S&P 500 index.

After the close of trading, S&P announced changes to the index that did not include Internet stocks. Bear Stearns Cos., SLM Holding Corp., IMS Health Inc. and Capital One Financial Corp. will be added to the S&P 500 after the close of trading Tuesday, replacing Green Tree Financial Corp., Beneficial Corp., Cognizant Corp. and Inland Steel Co.

Dun & Bradstreet Corp. is spinning off its commercial credit and business marketing units into a new company with the same name, which will be added to the S&P 500. The old corporation, renamed R. H. Donnelley Corp., will be dropped from the index.

Energy stocks jumped for a second day, along with the price of crude oil futures. Chevron Corp. rose $2.3125 to $84.0625; Texaco Inc. gained $1.8125 to $62.625; and drilling equipment maker Dresser Industries Inc. gained $1.0625 to $44.0625. August crude futures rose 87 cents a barrel to $14.52.

MGM Grand Inc. surged $5.5625 to $32.1875 after the company said it will pay $35 a share in cash for up to 6 million of its shares and plans to buy 6 million more, or a total of about 20 percent of its outstanding shares.

Sunbeam Corp. rose $2.4375, or 28 percent, to $11.25, ending a 12-day streak of declines during which it fell 61 percent. Investors expect the appliance maker's lenders to support the company even if second-quarter losses would otherwise push it into a violation of a loan covenant.

Robert Mondavi Corp. fell $2.50 to $29.5625 after the winemaker said it expects earnings this quarter to be as much as 15 cents below analysts' estimates because of increased promotional spending on its Woodbridge brand. Mondavi fell 6.7 percent Monday before trading was halted.

The S&P index of homebuilders' stocks had its biggest gain since May 1995, lifted by expectations that low interest rates will continue to fuel a boom in construction. Centex Corp. rose $2.25 to $39.375; Kaufman & Broad Home Corp. surged $4.4375 to $31.625; Pulte Corp. gained $1.4375 to $29.9375; and Ryland Group Inc. rallied $2.375 to $24.125.

Pub Date: 6/24/98

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