NEW YORK -- U.S. stocks surged for a third day yesterday as Treasury bond yields sank to a 10-week low, boosting confidence that corporate profits will keep on growing.
A pair of economic reports showing no pickup in inflation reassured stock investors that the Federal Reserve won't raise interest rates later this month. If corporate borrowing costs don't rise and bond yields keep falling, investors might regain their enthusiasm for stocks, analysts said.
Financial, auto, hotel and steel stocks notched some of the largest percentage gains. Rockwell International Corp. and Boeing Co. jumped after Boeing agreed to buy Rockwell's defense and aerospace units for $3.2 billion.
The Dow Jones industrial average gained 65.84 to 5,594.75, twice triggering New York Stock exchange limits on computer-guided trading. The 30-stock average has rebounded 412.05 points, or 8 percent, since falling to a six-month low of 5,182.7 on July 16.
In the broader market, the Standard & Poor's 500 index advanced 10.07 to 650.02, capping its largest three-day advance since mid-May. The Nasdaq composite climbed to 1,098.85, up 18.26.
Advancing stocks outpaced declining issues on the New York Stock Exchange by almost 4 to 1. Yields on benchmark, 30-year Treasury bonds plummeted as much as 15 basis points to 6.82 percent, their lowest since May 22 -- the last day the Dow #F industrials reached a record -- before steadying at 6.83 percent.
Some 439 million shares changed hands on the NYSE, topping this year's average of 414 million.
The Russell 2000 index of small capitalization stocks rose 3.42 to 319.42; the Wilshire 5,000 index gained 94.66 to 6,341.68.
Boeing saw its stock climb 62.5 cents to $89.125 after agreeing to buy Rockwell's aerospace and defense businesses, including the Minuteman missile and B-1B bomber programs, for $860 million in stock, the assumption of $2.2 billion of debt and $100 million of pension liabilities.
Rockwell jumped $2.75 to $55.25.
America Online Inc. jumped $2.875 to $33.375. The online computer service filed to list its shares on the New York Stock Exchange and move from its present home on the Nasdaq stock market.
Auto issues climbed after Chrysler Corp., the No. 3 automaker, posted a 19 percent increase in July car and truck sales. Chrysler rose 87.5 cents to $29.25, General Motors Corp. gained $1.50 to $50.25 and Ford Motor Co. rose $1.375 to $33.75.
Steel stocks had their best day since March 11 as Salomon Brothers raised its investment opinionson five steel producers.
Bethlehem Steel Corp. rose 25 cents to $10.375; LTV Corp. gained 50 cents to $11.875; National Steel Corp. advanced 62.5 cents to $10.50; Nucor Corp. jumped $1.875 to $48.75; and Steel Technologies Inc. surged 87.5 cents to $12.
Northwestern Steel & Wire Co. climbed 87.5 cents to $6 after it reached a four-year labor agreement with 1,900 members of the United Steelworkers of America.
Utility stocks, which often move up when interest rates are poised to fall, scored their largest one-day advance since late June. American Electric Power Co. climbed 62.5 cents to $42.125, and Consolidated Natural Gas Co. rose $1 to $51.375.
MBIA Inc., an insurer of municipal bonds, led financial stocks higher when it said quarterly profits rose to $1.84 a share from $1.60. Its stock climbed $1.875 to $77.50.
Federal Home Loan Mortgage Corp. jumped $3.75 to $88; Federal National Mortgage Association gained $1.50 to $33.25; Morgan Stanley Group Inc. rallied $2.625 to $51.375; and Dean Witter Discover & Co. climbed $1.875 to $52.75.
Golden Bear Golf Inc., trading under the symbol JACK, jumped $2.50 to $18.50. The golf services and products company founded by Jack Nicklaus sold almost 2.2 million shares at $16 each. Nicklaus kept 84 percent of Golden Bear's voting stock.
Pub Date: 8/02/96