Computers shine in mixed session Dow loses 32 points; S&P; 500 at record high

THE BALTIMORE SUN

NEW YORK -- U.S. stocks yesterday were mixed at the close of the best month for the Standard & Poor's 500 index since December 1991. Investors expect today's report on July employment to spark further gains.

Dell Computer Corp. led a rally in computer stocks, offsetting a decline in Goodyear Tire & Rubber Co. and other stocks that don't perform well when the economy is slowing.

The Dow Jones industrial average lagged behind the broad market, falling 32.28 to 8,222.61, after touching an all-time high of 8,282.07. The Dow topped 8,000, 8,100 and 8,200 for the first time last month en route to its best monthly gain since November.

The S&P; 500 rose 2.00 yesterday to a record 954.29, finishing the month with a 7.8 percent gain. That was the best monthly performance since the index soared 11.2 percent as the U.S. economy began to emerge from a recession at the close of 1991.

Advancing stocks led decliners by 1,747 to 1,157 on the New York Stock Exchange. Volume totaled 550 million shares.

Yesterday's economic reports showed growth and inflation slowed in the second quarter, signaling that interest rates are likely to fall further -- a favorable backdrop for stocks.

Personal computer stocks rose after Morgan Stanley, Dean Witter, Discover & Co. analyst Mary Meeker raised her earnings estimates on Dell. Dell gained $3.25 to a record $85.50 and Compaq Computer Corp. rose $2.13 to $57.13.

The Nasdaq composite index, which is dominated by computer-related companies, rose 5.76 to 1,593.81, bringing its gain for the month to 10.5 percent, just under its 11.1 percent advance in May.

The yield on the benchmark 30-year Treasury bond fell to 6.29 percent, the lowest since February 1996.

Optimism that interest rates will stay low or fall benefited the nation's largest banks, which enjoy fatter profit margins when rates are low. NationsBank Corp. rose $1 to $71.19; First Chicago NBD Corp. gained $3.50 to $75.88; and Chase Manhattan Corp. rose $1.06 to a record $113.19.

Brokerages Morgan Stanley, Dean Witter, Discover & Co., Salomon Inc. and Bear Stearns Cos. rose more than 5 percent to all-time highs amid takeover speculation and falling interest rates.

General Motors Corp. rose $2 to $61.88 after a Smith Barney analyst said GM is likely to boost its dividend 25 percent by the end of the year and spend more buying back its own stock.

The Dow average was dragged down by stocks that don't do well when the economy slows. Caterpillar Inc., which has risen 49 percent this year, fell $3.50 to $56. Goodyear fell $1.44 to $64.69 and Allied Signal Inc. lost $1.31 to $92.25.

Other losers included Eastman Kodak Co., which fell $1.31 to $67, and Procter & Gamble Co., which fell $1 to $152.13 after reporting per-share earnings 2 cents above the average 85-cent forecast from analysts.

Pub Date: 8/01/97

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