Dow index rises 61.32 to a record 5,748.82 Steady interest rates inspire confidence, propel stock markets to highs

THE BALTIMORE SUN

NEW YORK -- U.S. stocks soared yesterday as steady interest rates boosted confidence in future corporate profits.

Exxon Corp. and Chevron Corp. rallied to all-time highs, sending the Dow Jones industrial average to its first record in two months.

The benchmark 30-stock Dow average rose 61.32 to 5,748.82, its first close over 5,700, and is up 12.3 percent this year.

Also reaching records were the Nasdaq composite index, up 6.24 to 1,248.12 and 18.6 percent for the year; the Standard & Poor's 500 Index, up 4.24 to 673.15 and 9.29 percent for the year; the American Stock Exchange's market value index, up 4.15 to 609.36 and 11.2 percent this year; and the Russell 2,000 index, up 2.44 to 363.07 and 14.9 percent for the year.

The bull market has been running since Oct. 11, 1990, according to Birinyi Associates Inc. Bull markets end when the stock markets fall by 20 percent. That would translate into a 1,150-point drop in the Dow industrials.

The Dow industrials were led higher by Exxon, up $2.50 to $87.25; Texaco Inc., up $3.125 to $86.875; and Chevron, up $2.50 to $62, after Iraqi oil ministers accepted a United Nations plan to let the pariah nation sell oil to feed its starving population. Crude oil prices rose after weeks of decline as investors figured that supplies of Iraqi oil wouldn't significantly affect world oil inventories, now close to their lowest levels in 19 years.

Also helping the Dow industrials were shares of General Electric Co., up $3.125 to $84.375; Eastman Kodak Co., up $2.25 to $77.375; and International Business Machines Corp., up $1.125 to $112. All of those companies sell world-famous products that are expected to sell well in coming months.

The S&P; Midcap index rose 0.83 to 242.42, a record. The Wilshire 5,000 index, which tracks stocks listed on the New York, American and Nasdaq stock exchanges, rose 37.88 to 6,719.13, also a record.

The most active stock in U.S. composite trading was ValuJet Inc., down $1.875 to $11.25 as 10.4 million shares traded hands. Next most active was Iomega Corp., up $13.375 to $82.625 as 9.9 million shares changed hands, followed, in descending order, by the American depositary receipts of Nokia Corp., up $2.875 to $39.25 on trading of 7 million shares; the ADRs of Royal Dutch Petroleum Co., up 87.5 cents to $150.75 as 6.9 million shares changed hands; and Imp Inc., up $2.875 to $20 as 6.5 million shares changed hands.

Advancing stocks outnumbered decliners on the New York Stock Exchange 1,307 to 1,013. Volume was moderate, with 385 million shares changing hands, below the average for this year of 423 million shares.

Stocks were aided by flows of funds into equity mutual funds. Last week, investors poured some $6.6 billion into such funds.

Limited Inc. rose $1.125 to $21.25 and Toys 'R' Us Inc. gained 87.5 cents to $30.75 after both retailers reported earning a penny more per share in the first quarter than analysts expected, signaling that consumers have money to spend.

Urban Outfitters Inc. rose $1.25 to $41.50 after the retailer said its fiscal first-quarter earnings rose to 33 cents from 27 cents in the same quarter a year earlier.

Bond yields fell amid optimism that the economy isn't growing fast enough to force the Federal Reserve to raise interest rates to curb inflation when it meets tomorrow.

The yield on the benchmark 30-year Treasury bond was unchanged at 6.83 percent, its seventh straight day below 7 percent. Lower interest rates are viewed as good for stocks because they lower the cost of corporate borrowing.

Stocks' climb to records come amid forecasts that 1996 corporate earnings won't maintain last year's double-digit growth pace.

Analysts surveyed by IBES International Inc. expect the S&P; 500 companies to report earnings gains of 9.7 percent in 1996, down from 19.5 percent in 1995.

Pub Date: 5/21/96

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