NEW YORK -- U.S. stocks surged yesterday, sending the Dow Jones industrial average up more than 100 points for a second straight day, as the Federal Reserve left benchmark lending rates unchanged at 5.5 percent.
International Business Machines Corp., Procter & Gamble Co. and other companies that tumbled in Friday's rout rose the most.
"The news is as positive as it's been all year long," said Bob Finch, a money manager with Hartford, Conn.-based Aeltus Investment Management, which oversees $40 billion.
"Investors are returning to companies that have done well and seen strong earnings," Finch said.
Making up for Friday
The Dow jumped 114.74 to 7,918.10. With the 108-point rally Monday, the Dow had its biggest two-day jump since early May. The widely watched average has regained all but 24 points of the 247 points it lost Friday.
The other two major market measures more than recouped Friday's losses. The Standard & Poor's 500 index rose 13.52 to 926.01, and the Nasdaq composite index soared 31.19 to 1,600.71, a rise of 1.99 percent.
IBM led a rally in computer shares. The world's biggest computer maker rose $3.9375 to $107.9375.
The leading chip and software companies also gained; Intel Corp. rose $3.34375 to $97.90625, and Microsoft Corp. climbed $4.9375 to $138.8125.
Dell Computer Corp. rose $2.3125 to $84.6875. After the market closed, Dell reported that its second-quarter earnings rose to 59 cents a share, 5 cents above forecasts.
Shares of other personal computer makers were strong. Compaq Computer Corp. rose $2.5625 to $60.75, and Gateway 2000 Inc. gained $2.75 to $40.
Hewlett-Packard Co., which tumbled 8.7 percent in the previous two sessions, rose 81.25 cents to $64.625 after the electronics and computer company was raised to "outperform" from "neutral" by analyst Shao Wang at Smith Barney.
Gillette Co., which tumbled $4.1875 Friday, rose $2.6875 to $85.75 yesterday after Merrill Lynch & Co. analyst Deepak Raj raised his rating to near-term "buy" from near-term "accumulate."
Procter & Gamble gained $3.75 to $138.875, after slumping 6.5 percent over the prior two days amid concern that consumer products companies' earnings wouldn't live up to expectations this quarter.
Bay Networks Inc. jumped $3.125 to $37.125 after it said it expects that its fiscal first-quarter revenue will exceed expectations.
Home Depot Inc. rose $1.4375 to $49.4375, and Tiffany & Co. gained $2.50 to $43.25, both on earnings that beat analysts' estimates.
Limited Inc. lost 6.25 cents to $22.4375 after reporting that its net income fell to 10 cents a share, matching estimates.
AnnTaylor Stores Corp. was unchanged at $17.375, after it reported profit from operations of 4 cents a share, a penny short of estimates.
UPS settlement weighed
The effect on the market of the tentative settlement in the 15-day-old strike against United Parcel Service is unclear.
Some investors fretted that the strike emboldened labor across the nation, and that the resulting wage gains and inflation will undermine stocks. Peter Coolidge, managing director for equity trading at Brean Murray & Co., said the settlement will help stocks by making it easier for companies to conduct business.
"The strike was so disruptive; it slowed down the economy," he said.
"This, I think, is a victory for the country."
UPS rival Federal Express Corp., among the top gainers during the strike, gained 81.25 cents to $67 yesterday.
Pub Date: 8/20/97