Dow tops 5,500 as record rise continues Insurance companies, banks pace upsurge on hopes of rate cuts

NEW YORK — NEW YORK -- U.S. stocks extended a 14-month rally yesterday amid expectations that falling interest rates will buoy the economy and corporate profits.

The Dow Jones industrial average steamed past 5,500 for the first time, and the Nasdaq Stock Market's composite index celebrated its 25th anniversary with a record of its own.


Investors focused on shares of bank and insurance companies, such as NationsBank Corp. and American International Group Inc., which benefit first from lower borrowing costs.

The Dow industrials jumped 47.33 to 5,539.45 as Coca-Cola Co. soared $2.25 to an all-time high of $80.25. Eastman Kodak Co., Procter & Gamble Co. and American Express Corp. also paced the advance.


The 30-stock average, which has set a record every day this week, is up 1,864 points, or 51 percent, since Nov. 23, 1994. It has gained 8.3 percent so far this year.

The Standard & Poor's 500 index rose 6.14 to a record 656.07. Gains in household product, bank and insurance companies fueled a rebound from an earlier loss.

Among banks, NationsBank Corp. added $3 to $73.50; Suntrust Banks Inc. strengthened $2.75 to $74; and Wells Fargo & Co. jumped $5 to $258.25.

American International led the insurance group, climbing $4.125 to $102.75. The insurer reached a tentative settlement with Dow Corning Corp. on reimbursement for claims stemming from breast implant lawsuits.

Cigna Corp. jumped $2.625 to $120. The Philadelphia-based company said its plan to split its property and casualty business won approval from Pennsylvania regulators. The move will boost profits and rid the company of expensive policies, Cigna said.

The Nasdaq index rose 8.29 to a record 1,093.17, helped by Microsoft Corp.'s $2 jump to $98.875. The index is up 11-fold since its founding in 1971, the exchange said. More shares trade in a week now than traded in the market's first year. Some 556 million shares changed hands yesterday on the Nasdaq.

Also contributing to Nasdaq's climb was WorldCom Inc., which rose $1.75 to $39.625. The company announced it would join with GTE Corp. to provide long-distance telephone service.

MCI Communications Corp. rose 81.25 cents to $29.8125 after ** the company announced it will offer local telephone service in 24 cities by the end of the year.


Losses in Nynex Corp. and Bell Atlantic Corp. weighed on other telephone shares, after the Wall Street Journal reported that merger talks cooled between Nynex and Bell Atlantic.

The two stocks surged Wednesday on speculation that the companies were discussing forming a long-distance alliance to take advantage of sweeping telecommunications legislation passed by Congress last week. President Clinton signed the bill into law yesterday.

Nynex shares slid $3.375 to $55.875 after Smith Barney cut its recommendation on the company to "outperform" from "buy." Bell Atlantic fell 50 cents to $71.875.

Cisco Systems Inc. announced after the close that last quarter it earned $196.4 million, or 67 cents a share, above an average 63 cents predicted by analysts surveyed by IBES International Inc. The stock jumped $1.125 to $90 in after-hours trading on the Nasdaq from its close of $88.875, up 18.75 cents.

Other indexes also reached records. The Russell 2,000 index gained 1.06 to 320.47; the Wilshire 5,000 index added 51.65 to 6,384.75; and the American Stock Exchange market value index rose 2.07 to 564.66.

Some 1,343 stocks rose and 960 fell on the New York Stock Exchange, where 475 million shares changed hands -- well above the recent daily average of 368.3 million.


Expectations for slow growth and low inflation enabled the Treasury to sell $12 billion in 30-year securities at a record low yield. The yield on the 30-year government bond fell to 6.14 percent from 6.15 percent Wednesday.