U.S. stocks generate new highs for 2nd day Dow up 42.72 to 7,478.50; S&P; 500 rises to 862.91, led by cable TV shares; Wall Street

NEW YORK — NEW YORK -- U.S. stocks climbed to records for a second day yesterday, as the best environment for equity investing in a generation continued to attract new buyers.

The Dow Jones industrial average broke through 7,500 early in the day, before a drop in bonds eroded its gains. The 30-stock average closed up 42.72 at a record 7,478.50, paced by shares of Procter & Gamble Co. and Merck & Co., whose stocks perform best in periods of slow growth.


The Standard & Poor's 500 index rose 4.90 to a record 862.91, led by cable television stocks. Microsoft Corp. gave the group a boost after it said it invested $1 billion in Comcast Corp. to develop faster ways to deliver information. Comcast's nonvoting shares jumped $2.9375 to $21.375.

The Nasdaq composite index rose 7.20 to 1,412.04, an all-time high.


Among other indexes, the Russell 2,000 index of small capitalization stocks rose 0.76 to 387.90; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq exchanges, climbed 40.08 to 8,180.24; the American Stock Exchange composite index added 4.92 to 619.57; and the S&P; midcap index rose 0.61 to 282.60. All were records.

Stocks gained yesterday for the same reasons they rose Friday, when the government reported that unemployment had fallen to its lowest since 1973. At the same time, wage increases were limited, easing concern that inflation might lead to higher interest rates. So far this year, the Dow industrials have added more than 1,000 points, or 16 percent.

Advancing shares outnumbered those that declined by a margin of about 14 to 11 on the New York Stock Exchange, where trading was below the average for the past three months at about 470 million shares.

Buyouts in the financial services group by BankAmerica Corp. and Safeco Corp. spurred optimism that U.S. companies will take steps to improve their already fat bottom lines.

BankAmerica rose 75 cents to $124 after saying it would buy investment bank Robertson, Stephens & Co. for $540 million in cash. BankAmerica also said it would sell its Security Pacific Financial Services unit to Travelers Group Inc. for $1.6 billion. Travelers rose 37.5 cents to $58.25.

Lincoln National Corp. jumped $3.125 to $66 after Safeco Corp. offered to buy its property and casualty insurance unit for about $2.7 billion. Safeco dropped 75 cents to $44.50.

Atlas Copco AB, a Swedish maker of industrial machinery, agreed to buy Prime Service Inc. for $1.6 billion, or $32 a share. Prime Service shares rose $6.875, or 28 percent, to $31.75.

Microsoft invested in Comcast to expand the channels by which it delivers text, sound and video beyond the personal computer. Microsoft rose $1.1875 to $125.25.


Tele-Communications Inc. gained $1 to $16.0625 after Cable-vision Systems Inc. said it would buy TCI's New York-area cable holdings for $1.07 billion. Cablevision Class A shares surged $9.75 to $44.375.

American depositary receipts of Abacan Resource Corp. were the most active in U.S. trading, falling $3.5625 to $2.25. The Canadian oil and gas producer said oil production will be lower than expected and costs higher.

Westinghouse Corp., the owner of the CBS television network, rose $1.875 to $21.75 after Alex. Brown & Sons Inc. rated its shares a "strong buy" in new coverage.

Shares of Procter & Gamble rose $2.75 to $139; Merck gained $1.25 to $93.50; and Intel Corp. gained $3.25 to $149.25. Barron's magazine reported that those stocks were among the top holdings of Houston-based investor Fayez Sarofim, whose institutional accounts returned 28 percent a year on average for the three years ended in March.

The recent rally in bonds gave stocks a boost, investors said. On Friday, the yield on the benchmark 30-year Treasury bond, which moves opposite the price, declined to its lowest level in more than three months.

Pub Date: 6/10/97