Dow rises 60 points on high profits Blue-chip buying delivers best 2 days since April '94

NEW YORK — NEW YORK -- U.S. stocks surged yesterday as investors drove up International Business Machines Corp., Microsoft Corp. and other companies that are expected to keep posting strong profits. The Dow Jones industrial average chalked up its biggest two-day gain since April 1994.

IBM and Microsoft, with Chrysler Corp. and General Electric Co., climbed after logging unexpectedly strong profits. IBM's market capitalization alone rose $8 billion since the company reported earnings yesterday.


The Dow industrials soared 60.33 to 5,184.68, a day after they rose 57.45. IBM's $5.75 gain to $102 accounted for almost 19 points of the advance. The 30-stock average is just 31.79 points, or 0.61 percent, from its Dec. 13, 1995, record.

The expiration of options on individual stocks and stock indexes, together with increased purchases of U.S. stocks by overseas money managers, further contributed to the advance, traders said.


About 13 stocks gained in price for every 10 that fell on the New York Stock Exchange, where volume grew to 502 million shares from 450 million yesterday.

The Standard & Poor's 500 index jumped 3.59 to 611.83. The Nasdaq composite index rose 11.21 to 1,018.45, led by Microsoft, up $4.25 at $91.875. The Russell 2,000 index of small-company shares rose 1.27 to 305.28; the Wilshire 5,000 index gained 38.36 to 5,982.38; and the AMEX market value index rose 1.57 to 530.62.

Microsoft, the world's largest software company, gave the latest evidence that many high-technology businesses are able to post rapid growth even as the economy slows.

The Redmond, Wash.-based company said late Thursday that its fiscal second-quarter net income, excluding one-time items, rose 54 percent amid strong sales of its Windows 95 operating system and related products, beating analysts' expectations.

Computer-networking stocks continued this week's climb after companies such as Tellabs Inc. earlier announced unexpectedly strong earnings. Tellabs rose $2.25 to $39.25; Cisco Systems Inc. jumped $4.875 to $75.75; and Cabletron Systems Inc. rose $2.875 to $71.75.

Computer Sciences Corp. jumped $3.625 to $74.625. Merrill Lynch & Co. repeated a "buy" rating, saying investors were probably driving prices higher on expectations that earnings to be reported next week will beat analysts' forecasts.

IBM's stronger-than-expected profits helped other computer makers. Digital Equipment Corp. climbed $4.25 to $66.75; Hewlett-Packard Co. rose $2.25 to $77.75; and Compaq Computer Corp. increased $2.125 to $47.

Thursday, GE said it earned $1.12 a share in the fourth quarter, up from 99 cents in the year-earlier period and a penny higher than analysts' forecast. GE rose $1.75 to $74.25, accounting for five points of the Dow advance.