NEW YORK -- U.S. stocks surged yesterday for a second day amid optimism that falling interest rates will help corporate profits. Shares of retail and drug companies led the advance.
The advance brought the Dow Jones industrial average's gain over the past two sessions to 2 percent, helping make up its 2.5 percent loss in the first four days of last week.
A report yesterday showing anemic consumer spending suggested Federal Reserve policy-makers may have reason to cut lending rates further when they meet March 26. That would spur the economy and company earnings.
The Dow industrials soared 63.59, to 5,600.15, boosted by five series of computer-guided orders to buy stocks that added 77 points, according to Birinyi Associates. On Friday, the 30-stock average climbed 50.94 points. United Technologies Corp., AlliedSignal Inc., J. P. Morgan & Co., Goodyear Tire & Rubber Co. and Walt Disney Co. all reached records yesterday.
In the broad market, the Standard & Poor's 500 index, representing about 75 percent of the value of all U.S. stocks, climbed 6.44, to 650.81, extending Friday's 3.94-point rise.
The Russell 2,000 index of small-company stocks rose 1.46, to 325.56, and the Wilshire 5,000 index climbed 48.45, to 6,376.76.
On the New York Stock Exchange, 1,624 stocks rose and 767 issues fell. About 417.2 million shares changed hands, down from Friday's 471 million.
The Nasdaq composite index, flushed with computer and software stocks, fell 1.18, to 1,084.88, after falling 13.99, or 1.3 percent, Friday. Intel Corp., (INTC), down $1.1875 at $54.875; Cisco Systems Inc., (CSCO), down $1.375 at $44.125; and Oracle Corp., (ORCL), down 75 cents at $48.375, led the decline.
The benchmark 30-year government bond's yield fell to 6.33 percent from 6.36 percent.
Last week, as expectations for a rate cut wavered, stocks followed zigzagging moves in bonds. " "TC Surging retail stocks were one sign that investors expect lower borrowing rates and faster economic growth. Lowe's Cos., Home Depot Inc. and Dayton Hudson Corp. climbed as investors saw evidence of faster sales growth.
Lowe's (LOW) vaulted $3, to $35, after the North Carolina-based home-improvement chain said February sales in stores open more than one year gained 9 percent.
Home Depot, (HD), a Lowe's competitor that might post similar sales gains, leaped $3.375, to $47.625.
Dayton-Hudson, (DH), raised to "market performer" at Oppenheimer & Co., rose $2.625, to $79.875. Dillard Department Stores Inc. (DDS) gained $2.875, to $34.75, even after the Arkansas-based chain posted smaller-than-expected fiscal fourth-quarter earnings.
Pub Date: 3/05/96