NEW YORK -- U.S. stocks rallied yesterday as International Business Machines Corp. unveiled chips that can handle more information faster, sparking gains in computer-related shares such as Computer Associates International Inc.
IBM's announcement gave investors more confidence that the computer industry, one of the drivers of the 15-year bull market, will deliver robust earnings.
IBM rose $4.625 to $103.875. Intel, which last week said it can double power of its microprocessors, rose 93.75 cents to $96.375. Computer Associates rose $3.6875 to a record $72.6875.
Among broad market indexes, the Russell 2,000 index of small capitalization stocks rose 1.81 to 448.98; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq stock exchanges, added 49.64 to 9,222.33; the American Stock Exchange composite index advanced 3.00 to 689.94; and the S&P; 400 midcap index gained 0.48 to 333.02. All were records.
Advancing shares outnumbered those that declined on the New York Stock Exchange, by 1,718 to 1,180. Trading was 490 million shares, down from the three-month daily average of 528 million.
IBM said it developed a way to use copper instead of aluminum in computer chips, allowing it to make chips that can handle information more efficiently. The first products will go in IBM's mainframe computers, followed by processors for phone-network switches and eventually for computer memory.
Semitool Inc., which has a prototype machine for making copper chips, rose $5.625 to $24.25.
3Com Corp., a maker of components that link computers, surged $2.5625 to $50.375. Dell Computer Corp., a direct-mail retailer of personal computers, gained $2.0625 to $99.8125.
Microsoft Corp., the world's largest maker of computer software, was an unusual laggard, dropping $1.875 to $133.3125. Microsoft has been dogged by concern that earnings growth is slowing as new-product introductions stall.
Bond yields aided the rally, as the yield on the benchmark 30-year Treasury bond fell 2 basis points to 6.35 percent, the lowest since July 31.
American Express Co. rose $1.3125 to $81.125 after the Wall Street Journal said the company is clawing back market share from other bank credit cards like Visa.
Drug maker Merck & Co. Inc. gained $4.25 to $102.875.
Cali Realty Corp. fell after the real estate investment trust said it has begun a public sale of 10 million common shares. The company said it plans to use the proceeds to reduce debt and for general corporate purposes. Cali dropped 31.25 cents to $38.6875.
Lockheed Martin Corp. fell 43.75 cents to $110 after rising to $111.25 as the Air Force said the company's F-22, the world's most- advanced fighter plane, should escape future budget cuts. The Air Force plans to spend $43 billion on the F-22 over the next two decades.
Lunar Corp. fell after the medical-device maker said it expects earnings and revenue for the current quarter to be less than last year's 32 cents a share. Lunar fell $4.5625 to $19.4375.
Amazon.com surged $6.625 to $54 as some investors bailed out of failed bets that the company would be a flop. A so-called "short squeeze" occurs when investors who sold shares in hopes of a decline scurry to cover losses.
Micro Warehouse Inc. fell $6.625 to $21 after the direct marketer of computers and software said it will post a third-quarter pretax operating loss of $4 million due to disappointing European sales in August and September.
Electro Rent Corp. rose $5.25 to $33.25 as the provider of equipment rental and leasing services agreed to acquire GE Capital Services' GE Capital Technology Management Services division for $320 million in cash.
AmerUs Life Holdings Inc. rose $3 to $31.75 after the life insurer said it agreed to acquire AmVestors Financial Corp. in a stock swap valued at about $361 million. AmVestors fell $3.875 to $21.0625.
ICN Pharmaceuticals Inc. rose $6.0625 to $49.875 amid expectations that the drug maker's hepatitis drug could be combined with a Schering-Plough Corp. drug in a therapy for patients who have relapses.
Agco Corp. fell $1.8125 to $32.50 after the maker of agricultural equipment said 1997 profit will fall below analysts' expectations.
Pub Date: 9/23/97