NEW YORK -- U.S. stocks rose to records yesterday as economic reports showing no signs of inflation sent bond yields to eight-month lows, benefiting financial companies like Citicorp and American Express Co.
The Dow Jones industrial average rose 53.42 to 8,174.53, its fifth record in six days.
Yesterday's reports on employment costs in the second quarter and consumer confidence in July pointed to economic growth with low inflation -- the same recipe that has fueled the historic rally in the stock market for the last 2 1/2 years.
Stocks and bonds both benefited from news that President Clinton and congressional Republicans agreed on a plan to balance the budget by 2002 and cut taxes by $91 billion.
The Standard & Poor's 500 index rose 5.84 to a record 942.29, and the Nasdaq composite index gained 8.79 to 1,572.32, short of its July 16 high of 1,580.63.
Among broad market indexes, the Russell 2,000 index of small capitalization stocks rose 1.20 to 409.88, just shy of its record; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq stock exchanges, jumped 45.67 to a record 8,913.60; the American Stock Exchange composite index added .85 to a record 640.20; and the S&P; 400 midcap index advanced 1.68 to a record 308.59.
Advancing stocks led declining issues 1,705 to 1,143. Some 549 million shares changed hands, above the 513 million-share daily average during the past three months.
American Express rose $3.5625 to $82.4375. The financial services company yesterday beat analysts' earnings expectations, helped by its credit card and money management businesses.
Citicorp rose $5.875 to $130.5625 after Merrill Lynch & Co. analyst Judah Kraushaar raised his rating on the stock to near-term "buy" from near-term "accumulate." The 12-month price target is $168 a share.
Other bank gainers included Chase Manhattan Corp., up $2.625 to $108.875; First Chicago NBD Corp., up $1.8125 to $69.875; and NationsBank Corp., up $1.75 to a record $69.625.
The yield on the benchmark 30-year Treasury bond, which rose initially, fell 2 basis points to 6.38 percent.
Semiconductor maker Cyrix Corp. rose $1.875 to $24.9375 after the company agreed to be acquired by National Semiconductor Corp. for $550 million in stock. The purchase values Cyrix at $27.22 a share, an 18 percent premium to Monday's closing price of $23.0625. National Semiconductor fell $2 to $31.
Semiconductor stocks, which along with computer issues led the market's rally to records last week, fell as investors worried some of them are overpriced. Intel Corp. dropped 43.75 cents to $88.125; Motorola Inc. lost $1.6875 to $76.75; and Texas Instruments Inc. fell 87.5 cents to $110.125.
Computer networking stocks rose after Ascend Communications Inc. forecast higher sales in Europe in the second half of this year. Ascend rose $6.375 to $53.125 on most-active volume of 24.4 million shares; 3Com Corp. gained $3 to $58; and Cisco Systems Inc. rose $1.875 to $79.25.
Airline stocks rose with the proposed government budget gradually reducing the 10 percent domestic ticket tax to 7.5 percent.
AMR Corp., parent of American Airlines, rose $2.5625 to $104.5625; UAL Corp., parent of United Air Lines, gained $1.375 to $78; and Delta Air Lines Inc. gained $1.375 to $87.0625.
AEP Industries Inc. fell $7.125 to $26 after the plastics maker said it sees second-quarter net income to be about "level" with the first quarter's 27 cents a share because of adverse conditions in its domestic businesses.
Gateway 2000 Inc. fell $1.6875 to $38.125 yesterday on news after trading closed Monday that President and Chief Operating Officer Richard Snyder had resigned from the computer company to head a venture capital fund.
Pub Date: 7/30/97