Computer stocks set pace Dow rises 35; Small companies attract investors before release of employment data today

THE BALTIMORE SUN

NEW YORK -- U.S. stocks rose yesterday as investors snapped up shares of the computer-related companies that led the market's recent drop.

Microsoft Corp., Lattice Semiconductor Corp. and Dell Computer Corp. paced the rise, amid renewed optimism that key companies in the computer industry will report strong second-quarter profits.

The Dow Jones industrial average rose 35.63 to 7,305.29, only its second gain in seven sessions. The 30-stock average gave up about half of its early afternoon gain and is about 80 points shy of its all-time high of May 27.

The advance came a day before the Labor Department's release of the monthly employment report, a gauge of economic strength that analysts use to speculate about the direction of interest rates.

Enthusiasm for smaller stocks helped the Russell 2,000 index resume its rise to records. The index of small capitalization stocks rose 2.32 to a record 384.99 and is up 6.2 percent this year.

The Standard & Poor's 500 index rose 3.32 to 843.43, recouping about a third of its loss since setting its record high of 849.71 on May 27. The Nasdaq composite index, laden with computer companies, gained 10.38 to 1,390.05.

Among other broad U.S. stock indexes, the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq stock exchanges, gained 32.57 to 8,026.56; the American Stock Exchange composite index climbed 3.02 to a record 610.75; and the S&P; 400 mid-cap index rallied 1.42 to 280.78.

Advancing stocks topped decliners 1,511 to 989 on the New York Stock Exchange, where some 459 million shares changed hands. That's below the three-month daily average of 481 million shares.

Speculation that personal computer maker Gateway 2000 would join Intel and Seagate Technology Inc. in warning about weak profits drove down computer shares Wednesday. Yesterday, David McKittrick, Gateway's chief financial officer, told investors New York the company would have no advance announcement on its second-quarter earnings.

Gateway shares rose 37.5 cents to $62.125. Intel Corp., the largest semiconductor company and a bellwether for the industry, rose 64 cents to $143.14 after sliding 15 percent from its May 27 record of $169.3125. Dell Computer rose $3.6875 to $108.4375; Compaq rose 87.5 cents to $99.375; and Texas Instruments Inc. jumped 50 cents to $84.25.

Lattice Semiconductor jumped $1.625 to $56.50 after the company said it's on track to post consecutive quarterly revenue growth of 5 to 10 percent in its fiscal first quarter, in line with analysts' expectations.

Tobacco stocks rose on news that foes of the industry are near a compromise on the issue of shielding tobacco companies from punitive damages in lawsuits. The industry and opponents are in talks to resolve lawsuits over smoking-related illness.

Philip Morris Cos. rose $1 to $42.75, and RJR Nabisco Holdings Corp. gained $1.125 to $31.75.

Oil and oil field service stocks, which led the market's rally on Tuesday, yesterday bucked the trend and moved lower. The stocks are falling in tandem with a decline in crude oil futures prices, money managers said.

Airline shares took off after Glenn Engel of Goldman, Sachs & Co. raised the firm's recommendation on US Airways Group Inc. to "trading buy" from "market outperform."

Pub Date: 6/06/97

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