NEW YORK -- U.S. stocks surged after unexpectedly good earnings from Applied Materials Inc. ignited a rally in some of America's fastest-growing companies. The Dow Jones industrial average crashed through 6,900 for the first time and closed within 40 points of 7,000.
"People still think this market can deliver on earnings," said James Margard, chief equity officer at Rainier Investment Management with $3.5 billion in assets. "The fear that dominated this market is giving way to opportunity."
The Dow industrials rose 103.52, or 1.5 percent, to 6,961.63, led by Merck & Co., up $2.75 to $95.75.
Standard & Poor's 500 index rose above 800 for the first time, climbing 13.18, or 1.7 percent, to 802.77. The Nasdaq composite index soared 27.45, or 2.1 percent, to 1,358.96, short of its Jan. 22 closing record of 1,388.06.
On the broader market, the Russell 2,000 index of small capitalization stocks gained rose 2.65 to 365.40; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq exchanges, rose 117.41 to 7678.65; the American Stock Exchange composite index jumped 3.86 to 593.10; and the S&P; midcap index added 3.63 to 265.72.
The yield on the benchmark 30-year Treasury bond closed at 6.71 percent, up 1 basis point.
About 564 million shares changed hands on the New York Stock Exchange, with advancers outpacing decliners 2 to 1.
Applied Materials sparked the rally, gaining $7 to $52.125 after the maker of semiconductor equipment reported fiscal first-quarter earnings of 48 cents a share, above the average Wall Street forecast of 44 cents.
The report triggered gains in computer-related shares, which fell in five of the last seven sessions on concern that earnings growth might slow in 1997. Intel Corp. rose $5 to $156.75; Oracle Corp. gained $2.3125 to $41.4375; and Novellus Systems Inc. rose $8.75 to $82.75.
International Business Machines Corp., the Dow average's only computer stock, bucked the trend, falling $1.25 to $144 after Merrill Lynch & Co. cut its 1997 earnings estimate to $12.50 a share from $13. The firm cited concern that the dollar's strength against the yen and mark might hurt IBM's revenue and profit overseas.
Cisco Systems Inc. rose $4.0625 to $64.625 after falling more 16 percent from its Jan. 21 high on expectations that the networking equipment company's earnings and revenue growth would slow.
Oil stocks gained as investors sought to capitalize on a recent decline in share prices. Mobil Corp. led the advance, rising $2.75 to $130.25. Exxon Corp. rose $1.375 to $103 and Texaco Inc. added $1.375 to $104.75.
United Technologies rose for a second day, up $2.50 to $76.50, after President and Chief Executive George David told analysts he expected to accelerate the company's stock buyback program and predicted that 15 percent earnings growth would continue.
Equitable Cos. rose $1.375 to $30.625 after the insurance and financial services company said fourth-quarter profit from operations rose to 64 cents a share from 45 cents a year earlier, beating the 50-cent average estimate.
Money Store Inc. shares rose $5.125 to $26.375 after the consumer and commercial money lender said fourth-quarter earnings rose to 49 cents a share, beating the 40 cents analysts expected.
Bristol-Myers Squibb Co. rose $3.875 to $131.875 after the drug maker received U.S. approval to sell its Vagistat-1 ointment, the only one-dose medication available for treating vaginal yeast infections, as an over-the-counter medication.
Columbia/HCA Healthcare Corp. rose $1.50 to $42.625 after the hospital chain said its fourth-quarter net income rose to 61 cents a share from 53 cents in the year-earlier quarter, matching expectations.
Pub Date: 2/13/97