3/8 TC NEW YORK -- U.S. stocks yesterday recorded their biggest gain in more than a month after International Business Machines Corp., Microsoft Corp. and Citicorp bolstered investor confidence by beating earnings forecasts.
Stocks tumbled last week, led by computer-related shares, on concern that profit growth would slow after 18 straight quarters of unexpectedly strong earnings. The reports from IBM, Citicorp, Microsoft Corp. and Lucent Technologies Inc. doused that pessimism and increased the likelihood that stocks will keep climbing.
"IBM and Microsoft have ignited technology stocks," said Garrett Nagle, president of Garrett Nagle & Co. in Boston, which oversees $225 million. "The earnings reports are a reason for investors to say that last week's correction in the sector has run its course."
The Dow Jones industrial average advanced 139.00, or 1.8 percent, to 8,060.44. IBM shares rose $7.6875 to $105.1875, accounting for 30 points of the advance. The Dow's gain yesterday, with Monday's 74-point rise, recouped all of last week's 200-point slide. It was the biggest one-day rally since Sept. 16, when bonds rallied on signs of slow inflation.
Only two of the average's 30 stocks fell -- Goodyear Tire & Rubber Co. slid 12.5 cents to $68.375 after reporting earnings that matched estimates, and United Technologies Corp. fell 75 cents to $79.125.
In the broader market, the Standard & Poor's 500 index rose 16.67, or 1.7 percent, to 972.28, and the Nasdaq composite index rallied 27.09, or 1.6 percent, to 1,712.54. Microsoft spurred the rally in both indexes, surging $6 to $138.50.
Among other broad market indexes, the Russell 2,000 index of small capitalization stocks added 5.08 to 458.93; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq stock exchanges, jumped 145.06 to 9,404.62; the American Stock Exchange composite index rose 5.79 to 712.36; and the S&P; 400 midcap index gained 5.02 to 339.22.
About 1,944 stocks rose and 921 fell on the New York Stock Exchange, making it the broadest advance since advancers topped decliners by 1,472 stocks Sept. 16. About 582 million shares changed hands on the Big Board, above the three-month daily average of 530 million.
Bank shares rose after some of the biggest U.S. lenders reported earnings that topped expectations. The Keefe, Bruyette & Woods bank index jumped 19.22, or 2.6 percent, to 756.03.
Citicorp, up $5.3125 to $144.1875; Wells Fargo & Co., up $22.3125 to $314; and Chase Manhattan Corp., up $2.125 to $123.6875, were among the banks that beat earnings forecasts.
Earnings overall have topped estimates in the third quarter. Of the 223 companies in the S&P; 500 to report last quarter's profits, 57 percent topped estimates, 25 per- cent fell short and 18 percent were in line.
The Morgan Stanley high tech index jumped 10.99, or 2.2 percent, to 510.45, still below its all-time high of 536.85. Intel, up $1.0625 to $85.125, still hasn't made it back to $91.8125, where it closed a week ago before reporting disappointing profits.
Compaq Computer Corp. rose $2.50 to $73.875; Texas Instruments Inc. climbed $5.875 to $127.75; Dell Computer Corp. rallied $3 to $100; and Computer Associates International gained $4 to $80.25.
Takeovers continued to propel share prices higher. International Dairy Queen Inc. rallied $2.625 to $26.75 after Warren Buffett's Berkshire Hathaway Inc. agreed to buy the company for $585 million in cash and stock, adding an ice-cream-and-hamburger chain to Berkshire's portfolio of insurance, candy, shoe and newspaper holdings.
Yesterday's most active stocks in U.S. trading were Noise Cancellation Technology Inc., Intel, Microsoft, AT&T; and Cityscape Financial Corp.
Viasoft Inc. tumbled $7 to $43.50. Investors are concerned that the software maker won't match revenue expectations in the quarters ahead because spending on the year 2000 glitch -- which makes certain computer programs unusable after the turn of the century -- hasn't picked up.
Pub Date: 10/22/97