Stocks rise 41 points to another new high Dow average closes at 5,216 for its 69th record of year

NEW YORK — NEW YORK -- U.S. stocks climbed to records yesterday on expectations that earnings will expand fast enough in 1996 to extend the yearlong rally in stock prices.

A host of drug and health-care stocks gained after Merck & Co. told analysts its pipeline of new products remains strong. Shares of Eli Lilly & Co., Johnson & Johnson and American Home Products Corp. gained as investors bet the companies would earn more than forecast next year.


The Dow Jones industrial average rose 41.55 to 5,216.47, its first close above 5,200, eclipsing its previous closing high of 5,199.13 on Dec. 6. Shares of Boeing Co., AT&T; Corp., AlliedSignal Inc. and Merck helped the 30-stock average post its 69th record this year and extend its 12-month gain to 40.4 percent.

The Standard & Poor's 500 index rose 2.91 to a record 621.69, its 76th all-time high this year. The record was reached with the help of only 499 stocks -- LSI Logic Corp. wasn't scheduled to replace Scott Paper Co. in the index until the close of trading yesterday. Along with drug and health issues, shares of telephone, oil and aerospace companies gained.


The Nasdaq composite index rose 4.47 to 1,056.54, erasing much of Tuesday's 9.42-point drop. The index fell short of its record close of 1,069.79 Dec. 4. Shares of Intel Corp., Novell Inc., Microsoft Corp. and Bay Networks Inc. rose the most.

Among broad market indexes, the Russell 2,000 index of small capitalization stocks rose 1.03 to 312.59; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq stock exchanges, rose 26.1 to 6,084.51; the AMEX market value index rose 3.32 to 538.86; and the S&P; 400 midcap index rose 1.28 to 216.84.

Yesterday's most active stocks in U.S. composite trading were LSI Logic, Intel, Apple Computer Inc., Micron Technology Inc. and Cisco Systems Inc.

About 13 stocks rose for every 11 that dropped on the New York Stock Exchange, where some 414.7 million shares traded hands -- above the three-month daily average of 366 million.

One of the biggest gainers on the day was BayBanks Inc. The bank's shares surged $7.50 to 92.50 after Bank of Boston Corp. announced late Tuesday that it agreed to buy its rival for $2 billion in stock. Bank of Boston's stock slid $1.75 to $43.625.

Merck's shares gained $1.875 to a record $65.125. The world's biggest drug company met with analysts yesterday and said it is committed to expanding sales and trimming costs further.

Among drug and health-care shares that gained, Eli Lilly jumped 87.5 cents to $102.125; Pharmacia & Upjohn Inc. rose $1.125 to $39.25; Johnson & Johnson climbed 12.5 cents to $90.875; Rhone-Poulenc Rorer Inc. rose 37.5 cents to $50; and American Home climbed $2.50 to $97.875.

Abbott Laboratories' shares gained 12.5 cents to $41.75. A federal advisory board recommended use of the company's antibiotic Biaxin Filmtab, in combination with Astra Merck Inc.'s Prilosec, to kill the bacteria that causes most ulcers.


Shares of telephone companies also gained as U.S. lawmakers approached completion of a bill that would rewrite the 1934 U.S. communications law and would let regional phone companies enter the $70 billion-a-year long-distance market.

SBC Communications Inc. rose $1.125 to $57.125; Pacific Telesis Group jumped $1.25 to $34.25; Bell Atlantic Corp. spurted $1.75 to $67.375; US West Inc. gained $1.125 to $34; and Nynex Corp. rose $1.25 to $49.375.

Oil stocks rose to records as the price of crude oil for January delivery rose to $19 a barrel on the New York Mercantile Exchange, a six-month high. Exxon rose $1.25 to $85.75; Mobil Corp. rose $1.50 to $116.25; and Texaco Inc. rose $1 to $80.125.

Among the biggest decliners on the day was Motorola Inc. The cellular phone and semiconductor company's stock fell $1.625 to $59.875 after it was removed from Dean Witter Reynolds Inc.'s "recommend list."