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Stocks rally, but fail to hold big gains Bond market rattled by strong retail sales; Dow extends losing streak

NEW YORK — NEW YORK -- U.S. stocks rose and fell with the bond market yesterday, as the Dow Jones industrial average spurted 100 points but gave it all up by the close.

A drop in Boeing Co. offset International Business Machines Corp.'s gain, and the Dow average closed down 4.61 at 6,656.08, its fifth consecutive loss.

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A report showing unexpectedly strong retail sales rattled bond investors, who only six hours earlier had helped drive the benchmark 30-year Treasury bond to its biggest one-day gain of the year. Bonds also wound up little changed on the day.

In the broader market, the benchmark Standard & Poor's 500 index lost its entire 11.30-point gain to close unchanged from Monday. The Nasdaq composite index rose 1.56 to 1,354.37, after advancing 17.88 points.

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The Russell 2,000 index of small capitalization stocks gained 0.95 to 366.47; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq exchanges, rose 1.60 to 7,414.93; the American Stock Exchange composite index climbed 1.91 to 588.07; and the S&P; midcap index added 0.45 to 261.55.

Yields on the benchmark 30-year Treasury bond rose to 6.92 percent.

Boeing led the decliners in the Dow average after Lehman Brothers aerospace analyst Joseph Campbell raised concerns about the No. 1 commercial jet makers' sales growth. Campbell said his sales forecast for Boeing may overstate actual sales by $2 billion a year for the next two years.

He expects Boeing revenue of $34 billion this year. Boeing shares fell 43.875 to $105.75.

Exxon and other major oil companies fell, extending a decline that began last week as oil prices slid. Crude oil fell below $24 a barrel yesterday for the first time since early December. Exxon shed $2.75 to $100.50.

Among the growth stocks whose valuations are sensitive to interest rate changes, beverage maker Coca-Cola Co. fell 87.5 cents to $55.50, and No. 1 software publisher Microsoft Corp. fell 50 cents to $95.625.

About 14 stocks rose for every 11 than fell on the New York Stock Exchange. Some 541.6 million shares changed hands, above the three-month daily average of 464 million.

IBM led the early rise for stocks, and climbed most among those in the Dow industrials. A week ago, disappointing profits at IBM set in motion a 228-point retreat in the 30-stock average. That news, plus a jump in bond yields to four-month highs, raised concern that many companies' profit growth would falter later this year.

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Investors changed their tune on IBM yesterday after Salomon Brothers analyst John B. Jones Jr. boosted his investment opinion, calling the computer maker's 13 percent decline in the past week "overdone." IBM shares rose $5 to $150.75, their biggest one-day gain since Jan. 3.

Better-than-expected profits from Procter & Gamble Co., Walt Disney Co., Merck & Co. and Minnesota Mining & Manufacturing Corp., all Dow members, helped those stocks rally.

P&G; gained $2.75 to $110.50 and 3M rose $1.375 to $83.375. Merck climbed $2.50 to $87 and Disney gained $1 to $72.625.

General Motors Corp. said its profit from continuing operations rose to 92 cents a share, far above the 52-cent average forecast. A lower tax rate and other favorable items weakened the force of the positive surprise. But, turning their attention to concern that its cars would face tougher competition from the Japanese because of gains in the U.S. dollar, investors cut GM shares by $1.125 to $60.75.

The dollar surged to a four-year high against the yen yesterday, giving Japanese manufacturers a bigger profit cushion on their export models and more leeway to slash prices.

Other companies reporting unexpectedly strong earnings included UAL Corp., parent of United Airlines. But UAL fell $1.375 to $55.375 amid signs of a growing rift between the company and its pilots' union.

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Pub Date: 1/29/97


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