NEW YORK — NEW YORK -- U.S. stocks rallied yesterday, following bonds in a roller-coaster session as a drop in interest rates brightened the outlook for corporate profits.
The Dow Jones industrial average closed 53.11 points higher at 5,474.06 after tumbling 78.39 points before noon.
The New York Stock Exchange said that yesterday was the first time it ever invoked both uptick and downtick rules in the same session. The rules, which take effect when the Dow rises or falls 50 points, limit some computer-guided trading in an attempt to stabilize the market.
Bank and other financial stocks paced the market's recovery as the yield on the benchmark 30-year bond slid to 6.95 percent from 7.07 Tuesday. J. P. Morgan & Co. rose $1.625 to $84.375 and American Express Co. gained $1.75 to $47.875, helping lead the Dow industrials' advance.
The Standard and Poor's 500 index ended the day up 6.52 at 644.78, after sliding to 630.07. The Nasdaq composite index rose 0.76 to 1,183.43, recovering from a loss of nearly 20 points.
In the broader market, the Russell 2,000 index, which tracks smaller companies, fell 0.47 to 345.19; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq exchanges, rose 39.04 to 6,425.56; the Standard & Poor's Midcap index fell 0.42 to 232.63; and the American Stock Exchange market value index slid 3.06 to 584.64.
Eastman Kodak Co. rose $2, to $75.875, contributing 5.7 points, the most of any company, to the Dow industrials' rise.
Comparator Systems Corp. was the most active stock in U.S. composite trading for a fourth straight day. Some 81 million shares changed hands. The stock fell 31.25 cents to 56.25 cents.
Next most active were the shares of Associates First Capital Corp. which rose $5.75 to $34.75 as 25.4 million shares traded hands. The Ford Motor Co. unit went public yesterday and became the biggest publicly owned U.S. consumer finance company.
About 12.8 million shares changed hands of Imp Inc., followed by the American depositary receipts of Ericsson LM, of which about 12.4 million shares changed hands, and the shares of Iomega Corp., of which about 10.7 million shares traded.
The rebound in stocks came as bond yields tumbled 12 basis points. Bond investors had driven up yields in recent weeks as signs of a rebounding economy triggered concern that inflation would accelerate.
That concern ebbed as an auction of $14 billion in 10-year Treasury notes met with unexpectedly brisk demand.
Banks in particular benefit from declining yields.
NationsBank Corp. rose $1.875 to $79.125; Banc One Corp. rose 87 1/2 cents to $34.125; and Wells Fargo & Co. jumped $3.25 to $237.75.
Semiconductor issues were mixed in advance of a report due today that is expected to show that demand for computer chips remained weak in April. Intel Corp. rose 87.5 cents to $68.75; Motorola Inc. fell 31.25 cents to $61.25; and Atmel Corp. lost $1.25 to $38.50.
The Philadelphia semiconductor index of 16 stocks rose 1.21 to 208.86.
Microsoft jumped $1.125 to $114.25; Cisco Systems Inc. rose 50 cents to $52.75; and Hewlett-Packard Co. fell 25 cents to $103.75.
Equitable Cos. shares rose 25 cents to $23.125 after the life insurance and financial services company reported first-quarter earnings of 53 cents a share, above the year-earlier 38 cents and bettering analysts' expectations of 51 cents.
General Motors Corp. shares fell 12.5 cents to $53.875 after the world's biggest automaker said it was recalling about 44,000 1996-model Buick Regal and Chevrolet Lumina sedans that could have faulty brake systems.
United Technologies Corp. lost 87.5 cents to $103.75.
Ford Motor Co. is recalling 8.7 million cars to fix a faulty ignition switch made by United Technologies. Ford fell 25 cents to $35.75.
Pub Date: 5/09/96