NEW YORK -- U.S. stocks rose yesterday as investors bought drug and financial issues that were among the worst losers in Monday's rout. But gains were tempered by concern that interest rates are headed higher.
"Stocks have already corrected quite a bit," said Larry Babin, who manages $625 million at Society Asset Management. "Some investors think -- at these prices -- stocks are attractive."
The Dow Jones industrial average rose 27.57 to 6,611.05, after twice falling more than 50 points and rebounding. The 30-stock average slipped 297, or 4.3 percent, over the previous two sessions as rising bond yields increased the attractiveness of fixed-income investments.
Helping the Dow advance, Merck & Co. rallied $2.375 to $86.625; Procter & Gamble Co. gained $2.50 to $117.25; and Travelers Group Inc. climbed $1.875 to $49.875.
The Standard & Poor's 500 index rose 2.52 to 759.64, after sliding 33.38 in the previous two sessions. The Nasdaq composite index closed down 4.77 at 1,216.93 after climbing out of a 15.18-point drop earlier in the day.
On the broad market, the Russell 2,000 index of small capitalization stocks lost 1.68 to 340.88; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq exchanges, dropped 8.89 to 7,222.42; the American Stock Exchange composite index fell 2.44 to 566.27; and the S&P; mid-cap index slid 0.01 to 250.85.
About 1,362 stocks fell and 1,173 rose on the New York Stock Exchange, where some 516 million shares traded. The three-month daily average is 511 million shares.
Concern that last week's move by the Federal Reserve to raise interest rates won't be its last spurred investors to pick up shares of companies whose earnings are unlikely to waver if the economy loses speed. Sales of aspirin, razor blade, shampoo and prescription drugs tend to be steady.
"Higher interest rates affect their business less than other companies," said Richard Cripps, a market strategist at Legg Mason Wood Walker.
Computer-related shares fell, after Informix Corp. and Fore Systems Inc. said profits wouldn't match earlier expectations.
Informix was the most active stock in U.S. trading. It plunged $5.125 to $10 after the database software company said it expects a fourth-quarter loss because it focused too much on technology that customers aren't yet buying.
Fore Systems fell $4.25 to $10.75. The maker of data switches said its fourth-quarter earnings will be below analysts' expectations, as slower sales of networking products.
The yield on the benchmark 30-year Treasury bond dropped 2 basis points, to 7.07 percent.
Oil stocks lost ground. Their dividends become less attractive when rates rise as investors seek safer returns in fixed-income securities. Chevron Corp. fell 75 cents to $68.875 and Exxon Corp. lost 87 1/2 cents to $106.875.
Bank stocks rebounded, as investors said their recent weakness may have been overdone. The S&P; money center bank index rose 2.3 percent as Citicorp rose $4.25 to $112.50; BankAmerica Corp. rallied $2.50 to $103.375; Chase Manhattan Corp. jumped $1.625 to $95.50; and J. P. Morgan rose $1.625 to $99.875.
Catalina Marketing Corp. fell $9.25, or 24 percent, to $29.75 after the company said losses in Mexico and the closing of its electronic coupon-clearing business will reduce fourth-quarter earnings.
Conseco Inc. rose $3.375 to $39 after the insurance and annuities company said it would buy back many as 5 million of its common shares.
Equifax Inc. fell 12 1/2 cents to $27 after the credit information company said its Insurance Information Services Group will buy Kroll Associates, a private investigation company. Terms weren't disclosed.
Quickturn Design Systems Inc. plunged $7.75 to $8.25 after the company said it will report an unexpected first-quarter loss.
Pub Date: 4/02/97