U.S. stocks rose yesterday after the Federal Reserve left interest rates unchanged, making it likely that borrowing costs will stay low and profits will expand. Pfizer Inc. and banks such as Chase Manhattan Corp. led the way.
"It's a great environment to own stocks," said Michelle Clayman, chief investment officer at New Amsterdam Partners in New York, which oversees $660 million. "You have an economy that's growing faster than expected, and inflation is coming in lower than expected."
The Dow Jones industrial average rose 3.74 to 9,054.65, after climbing as much as 62 points. DuPont Co. was the Dow's biggest gainer, rising 1.4375 to 82.1875 after announcing that it will buy Merck & Co.'s interest in their drug venture for $2.6 billion. Merck fell 75 cents to $118.875.
The Standard & Poor's 500 index gained 3.74, or 0.3 percent, to 1,109.52, and the Nasdaq composite index rose 14.25, or 0.8 percent, to 1,845.87. Steady borrowing costs are good for stocks because they make it easier for companies to finance the expansion of their business.
Among other broad market indexes, the Russell 2,000 index rose 3.25 to 470.96; the Wilshire 5,000 index gained 48.26 to 10,533.97; the American Stock Exchange composite index climbed 0.33 to 732.69; and the S&P; 400 midcap index added 2.05 to 368.39. The NYSE composite index gained 1.84, or 0.32 percent.
The Bloomberg Maryland index, which tracks the top 100 stocks in Maryland by market valuation, rose 1.01 to 237.85.
Chase rose $2.625 to $144.875 after Chairman Walter Shipley said he expects "double-digit" per-share earnings growth ahead, and indicated that the company doesn't feel pressure to merge.
Citicorp rose $1.50 to $115.50, BankAmerica Corp. gained 68.75 cents to $83.25 and BankBoston Corp. rose $3.4375 to $110.4375.
Fed Chairman Alan Greenspan and his colleagues on the Federal Open Market Committee haven't changed interest rates since March 1997.
Some four stocks rose for every three that fell yesterday on the New York Stock Exchange, where about 570 million shares changed hands, topping Monday's tally of 519 million.
Drug companies rallied for a second day amid optimism that new treatments for cancer and other diseases will help profits.
Cor Therapeutics Inc. rose 56.25 cents to $17.4375 after the company won full U.S. Food and Drug Administration approval for its Integrilin heart drug.
Bristol-Myers Squibb Co. rose $2.0625 to $111.1875 after a study showed that the company's Taxol, when added to standard post-surgery chemotherapy in the early stages of breast cancer, boosts the odds that a woman will survive the disease.
Pfizer, the maker of the impotence drug Viagra, gained $2.1875 to $112.875. Some 278,715 prescriptions for Viagra were filled in the week ended May 8, up 6 percent from the week earlier, according to IMS Health, an industry research group.
Dell Computer Corp. rose 9.375 cents to $94.5938, adding to Monday's 4.50-point gain. After the close of trading, the personal-computer maker said fiscal first-quarter profit rose 54 percent, topping expectations, as it benefited from selling directly to its customers.
Home Depot Corp. gained $2.875 to $73, more than recouping Monday's drop of 81.25 cents, after the retailer said it earned 45 cents a diluted share in its fiscal first quarter, topping the 42 cents analysts forecast.
L-3 Communications Holdings Inc., a defense electronics company created last year by former Loral Corp. executives, Lehman Brothers holdings Inc. and Lockheed Martin Corp., rose $4.625 to $26.625 in its first day of trading.
Maryland stocks were led by Giant Food Inc., which rallied $5 to $42.6875 after Ahold NV offered to pay $2.7 billion, or about $43.50 a share, for control of the Landover-based supermarket company.
Pub Date: 5/20/98