Active trading sends stocks to record highs Dow tops 4,500

NEW YORK — NEW YORK -- U.S. stocks rose yesterday to record highs, pushing the Dow to its first close above 4,500, as shares of Microsoft Corp. rallied and telephone issues surged. The gains came on the sixth-most-active day of trading ever at the New York Stock Exchange.

Shares of regional Bell companies rose after the Senate passed a bill that creates more competition in the cable and long-distance industries. The bill was a victory for the telephone companies because it eventually will free them to enter new lines of business.


"It sets the framework for the creation of a pretty level playing ground, and that's when everybody wins," said William H. Reaves, senior portfolio manager and president of W. H. Reaves & Co., which manages $1 billion. "When there's more competition, there's more opportunity."

Shares of Bell Atlantic Corp. rose $1.50, to $57; Nynex Corp. spurted ahead $1, to $42.25; BellSouth Corp. rose $1.125, to $63.875; Ameritech Corp. climbed 87.5 cents, to $46.25; and SBC Communications Inc. added $1, to $46.625.


The Dow Jones industrial average rose 14.52, to an all-time high of 4,510.79, its 38th record so far this year. It took about 3 1/2 months for the average to gain 500 points from the 4,000 mark, compared with 21 months to move from 3,500 to 4,000.

Microsoft's shares rallied $2.125, to $87, below its 52-week high of $89.50 on May 24, after the software company triumphed in a five-year battle over federal antitrust charges. A Washington appeals court ordered a federal trial court to approve the company's negotiated settlement with the Justice Department.

The software company helped lead the Standard & Poor's 500 index up 2.71, to a record 539.83. In addition to telephone issues, shares of food, computer, beverage and health-care companies gained. Shares of Hewlett-Packard Co. jumped $2.875, to $75.50, amid reports the company expects a 20 percent gain in 1995 revenue.

Microsoft also helped the technology-laden Nasdaq composite index gain 5.97, to a record 908.65, after climbing 6.96 points Thursday. Yesterday's advance represented the index's 11th gain in the past 13 days. Besides Microsoft, Intel Corp., Tele-Communications Inc., DSC Communications Corp. and ADC Telecommunications Inc. rose.

More than 448 million shares traded hands on the NYSE.It was the most active day on the Big Board since Dec. 16, well above the three-month daily average of 337.34 million shares. Advancing stocks matched decliners on the NYSE.

Accounting for the heavy volume was "triple witching" -- the simultaneous expiration of stock-index futures, index options and options on individual stocks. Orders to buy or sell large quantities of stocks sometimes lead to an imbalance in supply and demand for equities. That causes prices to change quickly and often sharply.

Shares of household products companies gained as the outlook for a slowing economy grew. Shares of companies that make soap, diapers and other household goods rose as investors searched out stocks that post steady earnings through good times and bad.

Procter & Gamble rose 62.5 cents, to $73.125; Newell Co. closed up 37.5 cents, at $23.75; and Clorox Co. jumped 62.5 cents, to $62. Other "defensive" stocks, which provide steady returns when the economy slows, rose yesterday as well, among them Coca-Cola, up $1, at $62.375; Johnson & Johnson, up $1, at $68.75; Gillette Co., up 50 cents, at $84.125; and American Home Products Corp., up 87.5 cents, at $74.625.


The gains in stocks were held back by concern that the Federal Reserve will not lower interest rates as soon as investors expected. Chairman Alan Greenspan does not want to cut interest rates until he is sure the economy is in no danger of heating up, Business Week reported. Vice Chairman Alan Blinder is the only Fed official who is leaning toward lowering interest rates, the magazine said.

The Russell 2,000 index of small capitalization stocks rose 0.52, to a record 280.81; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq stock exchanges, rose 24.08, to an all-time high of 5,292.77; the Amex market value index rose 0.68, to a record 495.4; and the S&P; 400 midcap index rose 0.91, to a record 195.77.

Yesterday's most-active stocks in U.S. composite trading were Medaphis Corp., Tele-Communications, Intel, Computer Concepts Corp. and Home Depot Inc.