NEW YORK -- U.S. stocks rallied yesterday as gains in Walt Disney Co. and Microsoft Corp. shares sparked the market's first big advance in four days. The Nasdaq composite and Russell 2000 indexes reached record highs.
Disney shares jumped $2.50, to $59, after the entertainment company named Hollywood agent Michael Ovitz as its president. Microsoft rose $2.25, to $98.75, catapulting technology shares, amid strong European demand for the company's new operating system, Windows 95.
Led by Disney and Caterpillar Inc., the Dow Jones industrial average rose 41.56, to 4,659.86. The broader Standard & Poor's 500 index climbed 4.63, to 559.74.
It was the first gain in four days for both.
"You've got some market leadership from Disney and some of these other big names," said Kenneth Ducey, head trader at BT Brokerage Inc.
Mr. Ovitz, chairman of Creative Artists Agency, fills the vacancy created when Disney's former president, Frank Wells, died in a helicopter crash last year. His hiring alleviates concern that Disney lacked a successor to Chairman Michael Eisner, investors said. Capital Cities/ABC Inc., Disney's proposed merger partner, jumped $3.125, to $116.625.
The Nasdaq composite index, led by Microsoft, gained 8.33, to a record 1,012.44, eclipsing July 27's record of 1,010.66. It was the index's second straight gain. Norman Wilkinson, general manager of Microsoft's European operations, said the company is seeing brisk advance orders for Windows 95 in Europe and is prepared to meet demand for the Aug. 24 introduction.
Mr. Wilkinson's remarks spurred gains in technology companies with products tied to the new operating system.
The Russell 2000 index rose 1.19 to a record 300.27, the S&P; midCap 400 index added 1.26, to 207.02, the Wilshire 5000 index rose 38.07, to 5548.81, and the American Stock Exchange market value index climbed 2.14, to 523.94.
IBM rose $1.50, to $110.75; Compaq Computer Corp. gained 87.5 cents, to $53; Sun Microsystems Inc. gained $4.25, to $52.50; Autodesk Inc. rose $2, to $50; and Symantec Corp. added $1.0625, to $30.0625.
Micron Technology Inc. climbed $2.625, to $65.50; Texas Instruments Inc. surged $4.375, to $153.875; Applied Materials Inc. rose $2.75, to $104.50. Quarterdeck Corp. rose 12.5 cents, to $16.50; Adobe Systems Inc. gained 50 cents, to $59; Quantum Corp. gained $1.0625, to $25.3125; and Shiva Corp. rose $2, to $51.25.
The stock market rally wasn't especially broad, with about four stocks rising for every three that fell on the New York Stock Exchange. Trading was slow, because many people are on vacation. About 265 million shares changed hands on the NYSE, below the three-month average of 346 million.
A spate of proposed mergers and rebounds in economically sensitive stocks such as machinery maker Caterpillar Inc. and automakers Chrysler Corp. and General Motors Corp. also buoyed the market, traders said.
Integrated Silicon Systems soared $3.75, to $62.25. Arcsys Inc. said it will acquire the software developer through a stock swap.
National Convenience Stores Inc. rallied $5.375, to $19.125, after Circle K Corp. offered to buy the chain for $17 a share cash, or about $103 million.
Cipsco Inc. stock jumped $2.875, to $32.50. Union Electric Co. agreed to merge with the utility in a stock swap valued at $1.2 billion.
Shares of PP&L; Resources Inc., the holding company for Pennsylvania Power & Light Co., leapt $2.625, to $21.50. Peco Energy Co. made an unsolicited takeover offer of $24 a share in stock, or $3.8 billion.
In a separate development, Microsoft is said to be prepared to invest $1 billion to $2 billion in Turner Broadcasting System Inc. to help Turner finance a bid for CBS Inc. Turner Class B shares rose $2.75, to $24.625.
Caterpillar rose $2.625, to $66. The maker of earth-moving equipment won a $25 million contract to be the sole engine supplier for SMC Corp., a maker of recreational vehicles.
GM gained $1.25, to $48.375, and Chrysler added 87.5 cents, to $52.125. Chrysler was raised to "strong buy" from "neutral" at Lehman Brothers Inc.
WorldCom Inc. fell $2.125, to $28. John Kluge, the 81-year-old billionaire, is selling his 16 percent stake in WorldCom for $865 million to help put his estate in order.
Amgen Inc., which will split its stock 2-for-1 today, rose $2.375, to $95.50. Biotechnology stocks rose in recent days amid optimism about Amgen's experimental obesity drug, better-than-expected earnings from Chiron Corp. and perceptions biotech stocks are cheaper relative to the industry's earnings prospects than other technology shares, investors said.
Biochem Pharma Inc. rose $2.25, to $31.375. The Sunday Times of London reported Glaxo-Wellcome PLC might be interested in acquiring the Canadian biotechnology company for $43 a share. Both companies declined comment.
Life Partner Group Inc. sank $3.25, to $16.875. The life insurance holding company's second-quarter earnings fell to 16 cents a share from 44 cents a year earlier.
Willamette Industries Inc. rose $2.375, to $65.875. The paper producer will be added to the S&P; 500 index after the close of trading Aug. 18, prompting purchases by index funds.