Stocks forge another record Dow closes at 5,199 as outlook for interest and profits buoys market

NEW YORK — NEW YORK -- U.S. stocks rose to records yet again yesterday as investors grew more confident that corporate profits will expand.

The Dow Jones industrial average rose 21.68, to a record 5,199.13, in a seesaw session that saw the average rise above 5,200 for the first time. It was the 68th record this year, and boosted the average's gain for the year to 35.5 percent. Shares of Eastman Kodak Co., Coca-Cola Co., General Electric Co. and Philip Morris Cos. led the way.


Expectations that the Federal Reserve will trim interest rates later this month fueled optimism that the year-old rally in stocks still has room to grow.

The Standard & Poor's 500 index rose 2.50, to an all-time high of 620.19, its 75th record this year. The index rose 3.43 points before weakness in computer stocks pared the gain. Concern grew that sales of computers may be slowing at a pivotal time of the year -- about 36 percent of all computers are sold during the holiday season.


Among computer issues, Compaq Computer Corp. fell 62.5 cents, to $46.875; Hewlett-Packard Co. dropped 75 cents, to $81; and Apple Computer Inc. fell 75 cents, to $38.75.

The Nasdaq composite index -- filled with computer-related issues -- fell 4.16, to 1,061.73, its second straight drop after registering a record 1,069.79 Monday.

About six stocks rose for every five that fell on the New York Stock Exchange, where some 418.8 million shares traded, above the three-month daily average of 364 million.

Stocks gained as the yield on the benchmark 30-year Treasury bond fell as low as 5.95 percent, almost 200 basis points below the bond's 7.88 percent yield at the start of the year and its lowest in more than two years. Yields bounced back to end the day little changed amid concern that "too many things that have to go right are priced into the bond market," said Kevin McClintock, who heads the management of $5 billion of bonds at the Dreyfus Co. in New York. The slump in technology stocks was furthered by losses in the shares of companies that make products for the Internet. The Interactive Week Internet index of 37 stocks fell 5.78, to 246.09, giving back almost all the gains it registered Monday and yesterday.

With stocks such as Netscape Communications Corp. and Spyglass Inc. having more than doubled since the beginning of November, some analysts said prices are too high relative to expected earnings. Netscape fell $9.75, to $161.25; Spyglass dropped $4.50, to $110; and C-Cube Microsystems Inc. shed $7.625, to end at $102.50.

Weighing on Internet stocks, Microsoft has scheduled a conference tomorrow to discuss how it plans to make money on the Internet. Microsoft stock jumped $4.625, to $90.625.

So-called defensive issues gained amid expectations that a cut in rates by the Fed will prolong the economic expansion. Procter & Gamble rose $1.25, to $88; Merck rose 37.5 cents, to $63.75; Gillette Co. climbed 62.5 cents, to $53.375; and Premark International Inc. gained $1.125, to $51.875.

Wonderware Corp.'s stock rose $4.75, to $20. The supplier of Microsoft Corp.-based software products said it would increase spending for sales and research in a move that will hurt its 1996 earnings.


Avant! Corp.'s shares fell $5.75, to $35.25. The software company said local authorities searched its offices yesterday for documents and computer source code, which is used to write software.

Shares of Children's Discovery Centers of America Inc. fell $2.75, to $4.75. The provider of child-care and preschool programs said fourth-quarter earnings will be "substantially below" analysts' estimates because of "weakening" enrollments.

Shares of Learning Tree International Inc. jumped $2.50, to $14.50. The provider of information-technology education and training had its initial public offering of 3 million shares priced at $12. The shares began trading yesterday.