Markets stay aloft over cuts in Fed rates Dow posts record gain for week, while S&P 500 has best week in 14 years

Wall Street

October 17, 1998|By BLOOMBERG NEWS

NEW YORK -- Stocks rose yesterday, sending the Standard & Poor's 500 index to its best week in 14 years as investors continued the wave of buying after the Federal Reserve cut in key lending rates.

"The bull market hasn't been revived, but we're seeing a serious effort to get it started," said Jeffrey Davis, chief investment strategist at State Street Global Advisors, which oversees $400 billion. "We're going to see more rate cuts, and that's going to decrease the chance of recession."

The Dow Jones industrial average climbed 117.40, or 1.4 percent, to 8,416.76. DuPont Co. led the average to its fifth gain in six days. With yesterday's advance, the Dow posted a record one-week gain of 517.24 points. The previous record was 346 in the week of June 13, 1997.

The S&P 500 rose 8.93, or 0.9 percent, to 1,056.42. The Nasdaq Composite Index rose 9.94, or 0.6 percent, to 1,620.95.

Two stocks rose for every one that fell as almost 1.02 billion shares changed hands, making it the fourth-busiest day on the New York Stock Exchange.

Among other broad market indexes, the Russell 2,000 index of small-capitalization stocks gained 8.06, to 342.87; the Wilshire 5,000 index climbed 101.65, to 9,536.53; the American Stock Exchange composite index rose 5.84, to 605.50; and the S&P 400 midcap index added 4.90, to 310.31.

Tracking the top 100 Maryland stocks by market valuation, The Sun-Bloomberg Maryland index rose 2.86 to 174.76.

Regional banks, which have lost about a third of their value since July, led the rally.

Bank One gained $2.4375 to $47.635, Keycorp climbed $2.9375 to $31.125 and U.S. Bancorp rose $1.1875 to $40.9375. Lower interest rates boost demand for loans and credit, and reduce the cost of doing business for banks.

For the week, the Dow jumped 6.6 percent, the S&P 500 gained 7.3 percent, its best week since the week ending Aug. 3, 1984, and the Nasdaq Composite Index, dominated by computer-related companies, soared 8.6 percent -- its biggest weekly gain in 24 years.

All the major measures for stocks are now in positive territory for the year. The Dow industrials are up 6.4 percent, the S&P 8.9 percent higher and Nasdaq up 3.2 percent.

Airline shares, which rise and fall with expectations about economic growth, soared. Delta Air Lines Inc. rose $4.50 to 98, AMR Corp. climbed $1.875 to $56.375 and U.S. Airways Group Inc. gained $4.50 to $54.625.

Hewlett-Packard Co. paced a rally in computer shares, gaining $2.0625 to 54, after Sun Microsystems Inc. reported better- than-expected earnings. Sun rose $1.4375 to $50.25.

Tellabs Inc. increased $6.1875 to $44.9375 after chief executive Michael Birck said he expects fourth-quarter and 1999 revenue and earnings to rise, boosted by strong demand from new and existing customers. The shares are still about 50 percent below their July 22 high.

Fred Meyer Inc. rallied $3.6875 to $49 before it was halted after Bloomberg News reported that Kroger Co., which operates supermarkets and convenience stores, is in talks with Fred Meyer, a food and drug retailer. Kroger fell $1.1875 to $48.75.

Kellogg Co. lost $3.5625 to $34.0625 after it said profit would drop 20 percent from a year earlier. It blamed slow sales in the U.S. and United Kingdom and the weak global economy. Kellogg in July projected a 15 percent drop in profit.

BMC Software Inc. plunged $6.75 to $42.125 on concern the corporate-software maker failed to win more contracts in the second quarter and used deferred revenue from earlier this year to boost sales. Houston-based BMC said after the close of U.S. markets that second-quarter profit rose 35 percent as sales surged.

Gillette Co. gained $1.5625 to $44.625. The company said after the market closed that third-quarter earnings before a charge fell to 30 cents a share from 38 cents in the year-earlier period, matching the average estimate of analysts.

Pub Date: 10/17/98

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