NEW YORK -- A rally in cable and telecommunication issues pushed U.S. stocks higher yesterday for a second straight day.
Investors pinned yesterday's rally in U.S. stocks to Bell Atlantic Corp.'s decision to merge with Tele-Communications Inc., the world's largest cable systems operator. Bell Atlantic said Wednesday that it would merge with TCI and its cable programmer, Liberty Media Corp., for about $30 billion in stock and assumed debt. This would be the second-biggest merger ever, behind Kohlberg Kravis Roberts & Co.'s acquisition of RJR Nabisco Inc. in April 1989.
"Bell Atlantic has single-handedly changed the perception of telephone companies," said Peter Cooke, a portfolio manager at Glenmede Trust Co., which manages about $8 billion. "They sure aren't the stodgy companies they once were, and the stocks are showing that."
Bell Atlantic rose $1.875, to $67.75; Southwestern Bell Corp. gained $3, to $43; Nynex Corp. advanced $2.25, to $45.25; BellSouth Corp. increased $2.125, to $59.375; and Ameritech Corp. rose $3.375, to $87.125.
Among cable-TV stocks, TCI rallied $1.50, to $32.875; Liberty Media Corp.'s Class A shares rose $2.25, to $31.50; Cablevision Systems Corp. advanced $2, to $65.625; Comcast Corp.'s Class A shares gained $1, to $40.625; and Adelphia Communications Corp. rose $1.50, to $25.25.
The rise in these stocks helped lift the Nasdaq index 6.44 points, to an all-time high of 785.41. The Standard & Poor's 500 Index rose 5.34, to a record 466.83, and the American Stock Exchange Market Value Index gained 5.80, to a record 481.65.
About nine issues advanced for every seven that declined on the New York Stock Exchange. Trading was active, with about 353 million shares changing hands on the Big Board.
"Auto stocks acted really well following reports that sales rose to the highest level in early October since the summer," said Edward Laux, head trader at Kidder, Peabody & Co. North American-built vehicles sold at a seasonally adjusted annual rate of 12.1 million in the first 10 days of October, up from 11.2 million in September.
General Motors Corp. rose $1.125, to $44.75, and Ford Motor Co. gained $2.25, to $57.50. Chrysler Corp. jumped $3.375, to $51.875, as the No. 3 automaker said third-quarter net income increased to $1.13 a share from 62 cents, easily exceeding analysts' forecasts of 56 cents a share.
Consumer-goods stocks also rallied, as the group rebounded from the slump that occurred earlier this year. Philip Morris Cos. rose 75 cents, to $52.25; Procter & Gamble Co. gained $2.25, to $52.25; and Kellogg Co. rallied $3.375, to $52.75, after Goldman, Sachs & Co. repeated a "buy" rating on the stock. General Mills Inc. soared $4.125, to $64.875.
In addition to gains in telecommunication, auto and consumer goods stocks, the market got some help from more evidence that inflation was under control. The Labor Department reported yesterday morning that producer prices rose only 0.2 percent in September, or 0.5 percent through the first nine months of 1993.
The report helped fuel a decline in long-term interest rates. The yield on the benchmark 30-year Treasury bond fell to 5.85 percent, the lowest closing level since the Treasury regularly began selling 30-year bonds in 1977.
The government is scheduled to release a second inflation report today -- the consumer price index for September. Economists estimated that consumer prices rose 0.2 percent last month, according to a survey by Bloomberg Business News.
"Rates are lower again, and that gave the market a bit of a boost," said Bill Beise, a partner at Wessels, Arnold & Henderson. Low rates mean investors are more likely to put money in the stock market, where the hopes of higher returns exist, he said.
Cooper Tire & Rubber Co. was one big U.S. company that reported lower-than-expected earnings. Cooper's stock slumped $4.125, to $20.75.