Dow rises 52.39, to record 5,139.52 Declining yields on bonds spur broad-based rally

THE BALTIMORE SUN

NEW YORK -- U.S. stocks rose to records yesterday, posting their broadest rally in a month, as the lowest bond yields in more than two years fanned optimism that companies will post robust profits in 1996.

For the first time in almost three months, the Dow Jones industrial average, the Standard & Poor's 500 index and the Nasdaq composite index reached highs in unison. Companies with businesses as varied as General Motors Corp. and Microsoft Corp. led the advance.

Evidence that manufacturers are cutting production and retailers are having trouble luring holiday shoppers bolstered expectations that economic growth is slow enough for the Federal Reserve to reduce rates this month. That would bring down borrowing costs just in time to fuel profit growth next year.

The Dow industrials rose 52.39 points, to 5,139.52, as the yield on the benchmark 30-year bond fell to 6.02 percent, the lowest since Oct. 29, 1993. It was the average's 66th record this year and its biggest one-day gain since Nov. 8.

Companies that tend to do best when rates fall, such as General Motors, J. P. Morgan & Co. and DuPont & Co., were among the best performers. GM shares surged $1.875, to $51.25; Ford Motor Co. added 87.5 cents to reach $29.75; and Chrysler Corp. rose 12.5 cents, to $52.50.

The Nasdaq index, which includes technology issues such as Microsoft and Intel Corp., climbed 14.48 to a record 1,069.78, eclipsing the previous 1,070.2 high on Sept. 12.

The S&P; 500, meanwhile, climbed 6.70, to 613.68 -- the biggest gain since July 6 -- led by homebuilding, automobile and savings and loans issues.

Some 1,661 shares rose and 792 fell on the New York Stock Exchange, its broadest rally since Nov. 2. About 405 million shares changed hands, above the 349 million six-month daily average volume.

One of the losers on the NYSE was Boeing Co. The aircraft maker said it expects to deliver fewer jets than previously expected this year as an eight-week strike slows production. The stock slumped 75 cents, to $72.75.

Among broad market indexes, the Russell 2,000 index of small capitalization stocks rose 2.77, to 312.51; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq stock exchanges, climbed 62.98 to a high of 6,043.57; the American Stock Exchange market value index advanced 1.69, to 538.33; and the S&P; 400 midcap index rose 2.17 to a record 219.80.

Computer shares led a rally in technology stocks after Compaq Computer Corp. said it is quickly selling out some of its home computers and doesn't expect to fill all the orders this quarter. The stock gained 87.5 cents, to $48.625.

Semiconductor, software and computer companies led the market's rally in the first half of the year as their profits rocketed. The benchmark Philadelphia Semiconductor Index, long the best performing index in the U.S., had fallen 26.5 percent since its high on Sept. 11. Yesterday, it rose 4.64, or 2 percent, to 227.11.

Among other computer stocks that rallied, International Business Machines Corp. rose $1.375, to $96.125 and Hewlett-Packard Co. sprinted 75 cents, to $82.625. Software maker Microsoft rose $1.625, to $87.875.

Sun Microsystems jumped $5.50, to $89.875, while Netscape surged $12.25 to a record $149.50.

Financial shares extended this year's advance as the bond market rallied.

The S&P; major regional bank index set a high yesterday, beating its previous record of 243.72 set Oct. 18. The 23-stock index climbed $4.55, or 1.9 percent, to $247.96.

Among companies that gained, NationsBank Corp. rose $1.625, to $73.375; First Fidelity Bancorp jumped $3, to $78, and First Union Corp. added $2, to $57.75.

Among insurers, Lincoln National Corp. rose $2, to $48.50, and Providian Corp. climbed $1, to $41.375.

Investors also bet homebuilding companies would do better as lower rates prompted people to take out mortgages to buy houses. Centex Corp. jumped $2.75, to $35.625, and Pulte Corp.'s shares gained 87.5 cents, to $33.

Among other stocks that moved, LSI Logic Corp. jumped $4.25, to $44.75. The semiconductor company is expected to unveil a chip design tomorrow that will bring the Internet capabilities of a personal computer to a box that would cost less than a videocassette recorder.

AMC Entertainment Inc., the movie-theater operator, rose $1.50, to $23.50. Last week, the company offered to buy back $200 million of its higher-cost debt.

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