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Earnings lift stock market indexes Dow gains 25.89


NEW YORK -- U.S. stocks rose yesterday, buoyed by the release of higher-than-expected earnings from leading companies like Goodyear Tire & Rubber Co. and reports of strong orders at semiconductor companies.

TC The Dow Jones industrial average surged 25.89, to 3,931.92, and the average has now recouped more than half of Friday's losses. Gains in AlliedSignal Inc., Procter & Gamble Co. and Aluminum Co. of America accounted for almost half the average's advance.

The Standard & Poor's 500 Index rose 1.72, to 472.77, and the Nasdaq Combined Index climbed 3.83, to 786.53. The American Stock Exchange Market Value Index gained 2.96, to 480.64. Five common stocks advanced for every four that fell on the New York Stock Exchange.

Shares of semiconductor stocks led the market's advance after an industry trade group said chip makers got $107 worth of new orders last month for every $100 worth of semiconductors they shipped to the U.S. market. The gain in orders exceeded expectations.

Among computer-chip makers, Intel Corp. rose 37.5 cents, to $63.875, and National Semiconductor Corp. climbed 12.5 cents, to $19.25.

Goodyear rose 62.5 cents, to $48.125, after the company said earnings in the fourth quarter rose 37.5 percent, to $113.2 million, or 76 cents a share.

The rally in stocks was constrained somewhat by concern about a rise in interest rates. The Treasury is selling a record $40 billion in debt this week. The debt sale, known as a refunding, began with Tuesday's auction of $17 billion of three-year notes. Yesterday, the Treasury sold $12 billion of 10-year notes, and today it will auction $11 billion more of the current 30-year bond, the 6.25 percent issue due in August 2023.

"The refunding will put pressure on the bond market here through the week, and then on Friday we have the producer price report," said David Butler, head of equity trading at Kemper Financial Services Inc. in Chicago.

The report on producer prices is used to measure inflation.

"No one is in a hurry to buy stocks right now," said Alan Ackerman, executive vice president at Reich & Co. "There is too much uncertainty about the direction of interest rates."

Long-term interest rates, as reflected in the yield of the 30-year Treasury bond, were at 6.41 percent yesterday, after rising to 6.45 percent Tuesday, the highest level since Aug. 12. Rates are up almost two-tenths of a percentage point since the Federal Reserve moved last week to raise short-term rates.

In periods of climbing interest rates, investors tend to sell stocks and buy fixed-income securities.

Trading was active, as 332.6 million shares changed hands on the Big Board. Shares of WMX Technologies Inc., Western National Corp., Spectrum Information Technologies Inc., Comcast Corp. and U.S. Healthcare Inc. were the five most actively traded issues among U.S. stocks.

WMX Technologies plunged $3.125, to $25.125, after the nation's largest waste-management company said fourth-quarter net income fell to 34 cents a share from 37 cents in the prior year. The decline in WMX triggered a slump in rival Browning-Ferris Industries Inc., which fell 62.5 cents, to $29.

Spectrum rose 25 cents, to $2.8125. Shares of the wireless technology company were higher for a second straight day even as the president of the company's largest shareholder, American Heritage mutual fund, called for the resignation of Spectrum's president and directors.

U.S. Healthcare Inc. slumped $1.50, to $59.125, amid concern about its prospects after analysts at Donaldson Lufkin & Jenrette Securities Corp. and Alex. Brown & Sons Inc. lowered their investment ratings. The operator of health maintenance organizations raised its quarterly dividend yesterday by 25 percent, to 20 cents a share.

AlliedSignal Inc. rose $2.50, to $79.875. The company received federal approval to market a cockpit voice recorder. AlliedSignal shares rose Tuesday after the company reported higher-than-expected fourth-quarter earnings of $1.25 a share.

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