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Computer shares lead advance Nasdaq surges 1.41% while Dow industrials are rising just a point

NEW YORK — NEW YORK -- U.S. stocks rose yesterday as gains by Compaq Computer Corp. and other computer shares offset declines in financial stocks.

The Dow Jones industrial average rose 1.16 to 7,922.98, rebounding from a 61-point slide in the last hour of trading. The Nasdaq composite index, filled with computer shares, surged for a second day, rising 21.26, or 1.41 percent, to a record 1,523.88.

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Investors who expect personal computer price cuts to fuel sales in the second half of the year are pushing up shares in the largest computer-related companies, portfolio managers said.

Earnings "are going to be better than expected; that's what the prices are telling you," said Christy Wood, who manages the $600 million Westcore Midco Fund for Denver Investment Advisors Inc. "If Compaq is going to do well, a lot of companies are going to do well."

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Hewlett-Packard Co. rose $4 to $65 to lead gainers in the Dow industrials. J. P. Morgan & Co., down $1.375 at $107.625; Caterpillar Inc., down $1.25 to $56.125; and American Express Co., down $1.1875 to $78.75, held the 30-stock benchmark back.

The Standard & Poor's 500 index rose 1.70 to 918.38, just short of its record 918.75 of July 8, and the Russell 2,000 index of small stocks rose 1.59 to 403.85, its third record in a row and fourth in five sessions.

Among other broad market indexes, the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq stock exchanges, added 18.45 to 8,701.10, a record; the American Stock Exchange composite index lost 2.84 to 632.63; and the S&P; 400 mid-cap index added .96 to a record 300.87.

Bolstering Hewlett-Packard was the news that it is cutting prices up to 24 percent on business personal computers, following similar reductions by Compaq last week.

Compaq, the largest maker of personal computers, on Thursday predicted a strong second half and stable profit margins. Compaq rose $4.375 to $128.25 yesterday and Dell Computer Corp., which rose $9.375 $Friday to lead the rally, gained another $4.875 to $142.875.

Among bellwether computer stocks, Intel Corp. gained $1.84375 to $78.75 on most-active volume of 22.7 million shares ahead of its earnings report today. Microsoft Corp. rose $6.1875 to $135.9375.

The Philadelphia Stock Exchange's semiconductor index rose as much as 2.8 percent, led by Applied Materials, up $3.75 at $83, and Novellus, up $3.0625 to $99.

NationsBank Corp., the fourth-largest U.S. bank, rose 68.75 cents to $67.3125 after reporting earnings of $1.05 a share.

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DuPont Co. fell $1.75 to $61.50 after the company agreed to buy four bulk-chemicals businesses from Imperial Chemical Industries PLC for about $3 billion. Merrill Lynch & Co. lowered its 1998 earnings estimates on DuPont.

MCI Communications Corp. rose $2.25 to $37.25 on most-active volume of 20.7 million shares, recouping some of its 17 percent drop Friday, when the company warned profits will be hurt by the expense of trying to break into local telephone markets.

HCIA Inc. plummeted $16.375 to $15.625 after the company said it expects a second-quarter loss of 15 to 18 cents a share.

Katz Media Group Inc. last traded at $9.0625, up $1.6875, before being halted. The company, which sells advertising time for television, radio and cable operators, said it has been approached by a number of unnamed parties about a "corporate transaction" and no agreement has been reached.

Katz was one of many small stocks to rally. The S&P; 500 is up 24 percent this year and the Russell 2,000 is up only 11 percent, even though small companies generally are expected to see stronger earnings growth.

Advancing issues outnumbered decliners on the New York Stock Exchange by 1,474 to 1,380. About 486 million shares changed hands.

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Pub Date: 7/15/97


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