NEW YORK -- U.S. stocks rallied yesterday as investors bought shares of companies that are seen as most likely to deliver strong first-quarter earnings. These included Philip Morris Cos., International Business Machines Corp. and Merck & Co.
"The market is more interested in the stocks that are earning well now than those that may earn well in the future, and Merck is one of those companies," said Barbara Marcin, who helps manage more than $75 billion at Citicorp Asset Management. "The bias in this market is still for rising prices."
The Dow Jones industrial average rose 76.58 to 7,008.20, after two consecutive days closing below the 7,000 milestone. Leading the advance, Philip Morris rose $6 to an all-time high of $135.125; IBM rose $6.25 to $143.875, and Merck gained $3.125 to $98.25.
The Standard & Poor's 500 index rose 8.51 -- or 1.06 percent -- to 810.28, after losing 1.8 percent in three trading sessions.
IBM and Microsoft Corp., up $5.125 to $100.125, led computer-related shares higher. Intel Corp. and Cisco Systems Inc. rebounded in late trading after being down for most of the day. Intel rose $2.625 to $149 and Cisco rose 62.5 cents to $59. Their rebound helped the Nasdaq composite index recover from a 9.16-point drop to close 10.76 higher at 1,345.08.
The Russell 2,000 index of small capitalization stocks gained .08 to 366.45; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq exchanges, rose 58.44 to 7,727.40; the American Stock Exchange composite index climbed 0.78 to 598.07, and the S&P; midcap index added 0.99 to 266.04.
About 460 million shares changed hands on the New York Stock Exchange as advancers outnumbered decliners 1,485 to 1,042.
The Morgan Stanley high tech index rose 6.33 to 385.49, recovering from its worst two-day loss since July. The index dropped 5.6 percent Thursday and Friday amid concern that industry bellwethers Intel and Cisco won't match their 1996 growth rates.
Pfizer Inc. rose $1.875 to $96.625 and Bristol-Myers Squibb Co. climbed $3.875 to $133.875.
RJR Nabisco Holdings Corp. rose 62.5 cents to $38.50 and Loews Corp. gained $1.25 to $105.
Bucking the trend in tobacco stocks, UST Inc. fell $1.125 to $31.25 after John Bucchignano, the chief financial officer, and Robert Rothenberg, the company's leading tobacco executive, resigned because of differences over the company's direction.
Shares of paper and forest products companies rose after Morgan Stanley analyst Matthew Berler upgraded them, saying the stocks appeared "attractively valued by almost any measure."
Mead Corp. stock rose $2.625 to $60; Champion International Inc. gained $2.25 to $44.25; and Consolidated Papers Inc. climbed $2 to $50.75.
The Standard & Poor index of forest and paper products rose 35.78 to 1,114.47, its biggest one-day rally since April 16.
Oil shares declined as crude prices fell to seven-month lows. Exxon Corp. fell $1.125 to $102.625; Mobil Corp. lost $1.375 to $128.125 and Amoco Corp. fell 87.5 cents to $86.25.
Pixar Inc. share rose $6.875 to $21 after Walt Disney Co. said it will buy up to 5 percent of the company's shares and jointly produce five films in 10 years with the company that created the hit movie "Toy Story."
Security-Connecticut Corp. increased $7.875 to $45.375 after vTC ReliaStar Financial Corp. said it will buy the company for $488 million in stock and debt, forming the 11th-largest publicly held U.S. life insurer. ReliaStar fell 62.5 cents to $58.625.
Chubb Corp. rose 87.5 cents to $58.875 after the company agreed to sell its life insurance business to Jefferson-Pilot Corp. for $875 million in cash, as it moves to focus on property and casualty insurance. Jefferson-Pilot Corp. rose $1.875 to $59.50.
Staples Inc. rose 87.5 cents to $21.75 after Ralph Nader's Public Citizen group said the firm's proposed $4.4 billion purchase of Office Depot Inc. should be rejected because it will reduce competition and raise prices. Office Depot fell 87.5 cents to $18.875.
Pub Date: 2/25/97