Dow rises 12.29, led by Coke and Bells Industrials close at 5,110.26 after day of slow trading

THE BALTIMORE SUN

NEW YORK -- U.S. stocks advanced yesterday for a third day as investors bet on above-average earnings growth from telephone companies and Coca-Cola Co. in 1996.

The advance came on the slowest full day of trading at the New York Stock Exchange since the July 4 holiday. Only 217 million shares changed hands on the Big Board as many investors extended the three-day Christmas weekend.

The Dow industrials gained 12.29 to 5,110.26, bringing their three-day advance to 50.94 points, or 1 percent. Coca-Cola jumped $2.625 to $74.625 and Merck & Co. rallied $1.625 to $66.625.

The Standard & Poor's 500 index rose 2.34 to 614.3, while the Nasdaq composite index climbed 2.48 to 1,049.37. The Wilshire 5000 index rose 41.89 to 6,027.34, and the Russell 2000 index of small-company stocks added 0.52 to 312.83. Advancing issues outpaced declining stocks on the Big Board by 1,272 to 1,034.

Coca-Cola shares surged after rival PepsiCo Inc. said its international beverage shipments may expand 5 percent to 6 percent in the fourth quarter, matching domestic gains. Pepsi rose 12.5 cents to $55.75.

Nynex Corp. rose $1.625 to $51.75, Bell Atlantic Corp. advanced $1.25 to $66.78 and U S West Communications Group jumped $1 to $35.625.

The outlook for traditional, "consumer-growth" stocks is brightening. Colgate-Palmolive Co. rose $1.625 to $70.625, while Procter & Gamble Co. gained 50 cents to $83.50.

Oil shares rallied as natural gas and heating oil prices climbed in response to cold winter weather. Royal Dutch Petroleum Co. jumped $1.50 to $140.375, Chevron Corp. climbed 37 1/2 cents to $52.50, and Amerada Hess Corp. rose 50 cents to $52.

Banks and financial stocks climbed. U S Bancorp vaulted $4 to $36, West One Bancorp rallied $4.875 to $51.875, Wells Fargo & Co. rose 75 cents to $214.50 and J. P. Morgan & Co. gained 37.5 cents to $79.875.

Federal National Mortgage Association surged $2.25 to $119.75, Federal Home Loan Mortgage Corp. climbed 87.5 cents to $81.625, and Travelers Group Inc. climbed $1.625 to $60.375.

A handful of personal computer stocks, such as Hewlett-Packard Co., rose on optimism that quarterly profits will meet or exceed expectations. Hewlett-Packard jumped $1 to $85.625, International Business Machines Corp. rose 50 cents to $91.75, and Compaq Computer Corp. gained 12.5 cents to $49.875.

This week is historically a strong one for U.S. stocks. Share prices have rallied in the week between Christmas and New Year's Day in 32 of the past 42 years.

Reports of lackluster Christmas sales and big discounts in after-holiday promotions kept most retail stocks under a cloud.

Still, some traders said a miserly gift-giving season is already built into investors' expectations for this quarter's earnings. Shares of Sears, Roebuck & Co., whose stock has outpaced every other component in the Dow industrials this year by climbing 73.6 percent, slipped $1.125 to $38.375, while Wal-Mart Stores Inc. dipped 25 cents to $22.75.

Pier 1 Imports Inc. shares slumped $1.50 to $10.50. The chain said it lost $20 million, more than half its cash on hand, because of an unidentified financial adviser's "inappropriate trading."

Repsol SA American depositary receipts, Kmart Corp., Cisco Systems Inc., Silicon Graphics Inc. and Sun Microsystems Inc. were the most active stocks in U.S. composite trading.

Shares of Praxair Inc. rose 87.5 cents to $32.75. The Danbury, Conn.-based industrial gas company plans to sell CBI Industries Inc.'s construction contracting business and oil terminal business after it buys the company, the Wall Street Journal reported.

The major issue hanging over the markets -- the budget standoff -- had little effect, since Republicans and Democrats won't resume talks until Friday.

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