NEW YORK -- U.S. stocks rose to records yesterday on optimism that benign inflation will drive borrowing costs lower, helping corporate profits. Travelers Group Inc. and other financial shares led the advance.
"Unless you see a major downturn in earnings, the stock market doesn't have a whole lot of vulnerability," said David Mead, chief investment officer at Harris Bank in Chicago, which oversees $20 billion.
The Standard & Poor's 500 index and Nasdaq composite index reached records for a third day in a row. The S&P; 500, which reached records Thursday and Friday for the first time since early August, gained 7.66 to 972.69. The Nasdaq rose 6.04 to 1,721.91.
The Dow Jones industrial average rose 61.64 to 8,100.22.
Amid expectations that third-quarter earnings will top forecasts, Stocks are climbing after a 7 percent slide in August. Some investors predict that the Dow is heading back to record levels.
Stocks rose as the yield on the benchmark 30-year Treasury bond dropped 2 basis points to 6.26 percent, a 19-month low.
Other broad market indexes also set records. The Russell 2,000 index of small capitalization stocks added 2.18 to 461.70; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq stock exchanges, climbed 65.76 to 9,405.84; the American Stock Exchange composite index increased 6.88 to 716.80; and the S&P; 400 midcap index gained 2.18 to 338.18.
Advancing stocks outpaced decliners 1,801 to 1,102 on the New York Stock Exchange, where 495 million shares changed hands. The three-month daily average is 530 million shares.
Stocks got an additional boost from mergers and acquisitions. Federal Express Corp. said it will pay about $2.47 billion in stock for package delivery company Caliber System Inc. Federal Express fell $3.50 to $75.25. Caliber System jumped $3.9375 to $59.25.
H. F. Ahmanson & Co., a California thrift, rose $1.50 to $58.625 after agreeing to buy Coast Savings Financial Inc. for $901 million in stock. Coast Savings soared $4.8125 to $58.8125.
BankAmerica Corp. climbed $2.4375 to $80.50; Travelers jumped $2.75 to $74.4375; and Chase Manhattan Corp. rose $2.3125 to $124.9375.
Exxon Corp. climbed $1.5625 to $66.75; Chevron Corp. jumped $1.9375 to $87.8125; and Mobil Corp. added $1.625 to $76.4375.
Occidental Petroleum Corp. jumped $2.8125 to $29.625 after the company won an auction to buy the government's share of the U.S. Naval Petroleum Reserve for $3.65 billion.
3Com Corp. jumped $3.1875 to $54.25 after Christopher Stix, an analyst at Cowen & Co., raised the networking company's stock to "strong buy" from "buy." Stix said he's more confident that the company will match his growth expectations and expects fiscal 1998 earnings per share to rise 27 percent from 1997's levels.
Alliance Semiconductor Corp. dropped 62.5 cents to $8.875 after saying it would report a loss for its second quarter, which ended Sept. 27, because of weak revenue. Analysts expected the company to earn 3 cents a share.
Silicon Graphics Inc. dropped $8.8125 to $18.0625 after the computer maker said it expects a fiscal first-quarter loss and lower revenue because of poor sales of its computer servers.
Kulicke & Soffa Industries Inc. tumbled $8.125 to $39 after the company said fiscal first-quarter earnings would be below analysts' expectations because customers delayed buying its equipment used for making microchips.
Creative Technology Ltd. jumped $2.875 to $10. The company is in talks to buy Cambridge SoundWorks Inc. The transaction would add Cambridge's audio equipment to Creative's multimedia computer products line.
Camelot Corp. dropped 75 cents to $7.25. The company issued a statement clarifying the status of talks with makers of personal computers about licensing its VideoTalk Internet videoconferencing technology. Camelot said it was "in the early stages of demonstrating" the technology to PC makers; last month, the company said it was "in negotiations to license VideoTalk."
E Trade Group Inc. slid $7.5625 to $39.3125. The provider of online services was downgraded to "neutral" from "buy" by analyst Phil Leigh at Raymond James Financial Inc.
Pub Date: 10/07/97