NEW YORK -- U.S. stocks rose with bonds yesterday on a government report showing economic growth with little inflation.
J.P. Morgan & Co. led the Dow Jones industrial average up 74.17 to 7,922.18.
The Standard & Poor's 500 index gained 7.31 to 945.22, led by banks and drug companies. Falling interest rates boost demand for bank loans and make the assets they own more attractive.
Even after yesterday's rise, the Dow average was little changed for the week, up less than 5 points, and 4.1 percent below its Aug. 6 record. Any further gains depend on a bond market rally, investors said.
"If the bond rally continues, I think stocks will hit new highs," said Neil Hokanson, president of his own $75 million money management firm in Encinitas, Calif.
The yield on the benchmark 30-year Treasury bond fell 3 basis points to 6.36 percent, about where it was on Monday. Two weeks ago, the yield stood at 6.59 percent.
The Nasdaq composite index rose 3.35 to 1,682.24, up less than 2 points for the week. Concern about slow sales at Lattice Semiconductor Corp. and Xilinx Inc. and other specialty chip makers kept the index from rising much yesterday.
Among broad market indexes, the Russell 2,000 index of small capitalization stocks rose 0.96 to 448.88; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq stock exchanges, added 49.73 to 9,147.19; the American Stock Exchange composite index advanced 4.60 to 689.84; and the S&P; 400 midcap index gained 1.42 to 329.88.
J.P. Morgan rose $2.8125 to $113.9375, leading a bank rally. Chase Manhattan Corp. gained $1.875 to $117.375 and First Chicago NBD Corp. climbed $1.875 to $75.625.
Among securities stocks, Merrill Lynch & Co. surged $3.0625 to $73.3125, Lehman Brothers Inc. gained $1 to $52.25 and A.G. Edwards Inc. gained $1.5625 to $49.75. Brokerages and investment banks have jumped since Travelers Inc. said
Wednesday that it would pay $9 billion in stock for Salomon Brothers Inc.
Advancing shares outnumbered those that backtracked, 1,774 to 1,086. Trading on the New York Stock Exchange was 505.3 million shares, in line with the three-month daily average.
International drugmakers were a big hit with investors. Merck gained $1.0625 to $100.1875; Pfizer Inc. rose $1.125 to $61; and Warner-Lambert Co. rose $2.9375 to $133.75.
Nextlink Communications Inc. surged $6.25 to $23.25 in its first day of trading as investors bet that the cachet of cellular pioneer Craig McCaw will mean success for his new local phone company.
Network Solutions Inc., which designates domain names for Internet sites, jumped $5.3125 to $23.3125 in first-day trading.
Lattice Semiconductor tumbled $4.875 to $64.50, leading a decline in chip makers as weak orders were seen hurting third- quarter results. Xilinx dropped $1.3125 to $50 and Altera Corp. fell $1.25 to $53.75.
Cymer Inc., a maker of computer chip factory equipment, fell $4.50 to $25.50 on renewed concern that its major customers are suffering technical problems in building cutting-edge microchip production tools that use Cymer's lasers. Cymer has fallen 44 percent in September.
Eastman Kodak Co. rose $1.5625 to $64 after announcing Thursday that it will fire about 10 percent of its clerical staff and 20 percent of its managers in a move to boost profits.
Minnesota Mining & Manufacturing Co. gained $2.625 to $90.4375 after Cowen & Co. raised its investment opinion from "neutral" to "strong buy," citing accelerating growth and improved margins.
Pub Date: 9/27/97