Stocks rise after Fed stands pat on rates Dow adds 74 to hit 7,303, rallying 150 points from pre-announcement low


NEW YORK -- U.S. stocks rose yesterday after the Federal Reserve left interest rates unchanged, fueling optimism that stable borrowing costs will let corporate profits expand.

The Dow Jones industrial average gained 74.58, or 1 percent, to 7,303.46. The 30-stock average climbed 150 points from its low before the Fed announcement.

International Business Machines Corp. led the advance, rising $5 to $173.75, just $1 below its August 1987 record close.

Citicorp rose $3.875 to $119.875. Merrill Lynch & Co., the largest securities firm, rose $5 to a record $104.625. Insurer American International Group Inc. rose $1.50 to $132.375.

The S&P; 500 index rose 8.39 to 841.66, just 0.23 point short of a record. Semiconductor shares led the charge in the S&P; 500 after Dataquest Inc. researchers said the companies should benefit from rising sales of mobile telephones, personal computers and new electronic products. Motorola Inc. rose $1.125 to $63.50, and SGS Thomson Microelectronics NV rose $1.50 to $79.25.

The Nasdaq composite index soared 22.64, or 1.7 percent, to 1,363.88. It is still 24 points below its record closing of Jan. 22.

On the broad market, the Russell 2,000 index of small capitalization stocks gained 1.63 to a record 368.20; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq exchanges, jumped 66.16 to 7,927.23, another record; the American Stock Exchange composite index climbed 3.28 to 590.76; and the S&P; midcap index added 1.97 to 271.39, also a record.

The yield on the 30-year Treasury bond fell 2 basis points to 6.90, while bonds with less than a year to maturity saw their yields drop as much as 18 basis points.

Intel Corp., the world's top chip maker, rose $6.25 to $161 after Merrill Lynch forecast sales could rise as much as 36 percent a year.

Dell Computer Corp., a direct-mail personal computer retailer, rose $2.125 to $99.625, an all-time high. After the market closed, Dell reported earnings in the latest quarter rose to $1.08, beating analysts' top estimates.

Among the market's decliners, C-Cube Microsystems Inc. shares plunged $5.625 to $19.875 after the maker of chips for video-CD movie players forecast disappointing earnings and declining sales in China, a sign it's losing business to competitors. C-Cube forecast fiscal first-quarter net income of 20 cents to 25 cents, down from the year-earlier 41 cents. Rival ESS Technology Inc. rose 31.25 cents to $14.1875.

Electronic Data Systems Corp. declined $1.25 to $36.75. The computer and management consultant said it expects second-quarter profit of 43 cents to 45 cents a share before a previously announced charge, at least 5 cents below the average forecast.

Retailers such as Home Depot Inc. and AnnTaylor Stores Corp. rose after they reported earnings for the February-April period that topped the average forecast from analysts. Home Depot gained $1 to $60.75 and AnnTaylor rose 62.5 cents to $24.

Ford Motor Co. rose $1.125 to an all-time high of $37.50 after Merrill Lynch & Co. rated the No. 2 U.S. carmaker's shares "attractive," based on its aggressive cost-cutting plans.

Pub Date: 5/21/97

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