NEW YORK -- U.S. stocks rose yesterday, on the first day of the third quarter, on optimism that the Japanese government will revive its economy with a proposal to clean up problem bank loans. Merrill Lynch & Co., Travelers Group Inc. and other companies that do business in Asia gained.
The Dow Jones industrial average rose 96.65 to 9,048.67, its first close over 9,000 in three weeks. Boeing Co. led the gains, rising $2.8125, to $47.375, after its second-quarter jetliner deliveries beat analyst expectations.
The Standard & Poor's 500 index rose 14.72, to a record 1,148.56. The benchmark for the U.S. market is up 18 percent this year.
The Nasdaq composite index climbed 19.72, to 1,914.46 -- about 3 points from its April 22 peak.
Among other broad market indexes, the Russell 2,000 index of small capitalization stocks rose 2.46, to 459.85; the Wilshire 5,000 index gained 123.20, to a record 10,786.81; the American Stock Exchange composite index climbed 2.03, to 7223.31 and the S&P; 400 midcap index added 5.58, to 365.66.
The Bloomberg Maryland index, which tracks the top 100 stocks in Maryland by market valuation, fell 4.61 to 232.57.
Two stocks rose for every one that fell on the New York Stock Exchange. About 683 million shares changed hands, above the daily average for the past three months of 616 million.
Japan is expected to unveil a proposal today to clean up problem bank loans, and Prime Minister Ryutaro Hashimoto said the government will soon begin discussion of income tax cuts, the Jiji Press reported. Japan's Nikkei 225 index surged for a sixth day, gaining 3.4 percent to 16,352.
Merrill Lynch, which hired 2,000 former employees of defunct brokerage Yamaichi Securities Co. earlier this year, jumped $3.8125, to $96.0625.
Travelers, which agreed last month to buy a 25 percent stake in Nikko Securities Co., gained $2.4375, to $63.0625.
Federal Reserve policymakers left interest rates unchanged, the yield on the benchmark 30-year Treasury bond closed unchanged at 5.62 percent.
Also fueling the recent rally: Investors increased their purchases of U.S. stock mutual funds in the latest week. About $6.86 billion was added to U.S. stock funds in the week that ended Monday, up from $4.01 billion in the prior week, according to Trim Tabs Financial Services Inc.
Internet stocks soared on speculation that AT&T; Corp., America Online Inc., CBS Corp. and others might be shopping for Internet partners. Netscape Communications Corp. rocketed $8.625, to $35.6875; DoubleClick Inc. jumped $14.3125, to $64; Yahoo! Inc. gained $12.375, to $169.875; and EarthLink Network Inc. rose $10.25, to $87.
At Home Corp. surged $6.1875, to $53.50, after the Internet content company said it reached agreements with Jones Intercable Inc. to offer high-speed Internet service over cable TV lines in the Washington area. At Home shares have more than doubled in 1998.
Nike Inc. gained $3.4375, to $52.125, after the world's largest footwear company reported fourth-quarter profit of 4 cents a share, a penny ahead of estimates. Goldman, Sachs & Co. analyst Margaret Mager raised her rating on the stock to "market outperform" from "market perform." Analysts at Morgan Stanley Dean Witter & Co., BT Alex. Brown Inc. and Donaldson, Lufkin & Jenrette Inc., also encouraged that Nike's prospects are improving, raised their ratings as well.
DuPont Co., one of the 30 Dow industrials, rose $2.375, to $77.0625. Research presented at the Worlds AIDS Conference in Geneva this week showed that DuPont's Sustiva, the first once-a-day HIV drug, is more potent as part of a multidrug treatment than Merck & Co.'s protease inhibitor, Crixivan. Merck dropped 75 cents, to $133.
Hambrecht & Quist Group, a San Francisco investment bank, slumped $2.3125, to $34, after Credit Suisse First Boston said it hired Deutsche Bank Securities' three most productive investment bankers. H&Q; surged 22 percent yesterday on speculation that CSFB would make a takeover offer.
Two of the three big three automobile companies gained. General Motors Corp. rose $1.6875, to $68.50, after it said it will drop some low-profit car models if the two major strikes by the United Auto Workers continue into August. Chrysler Corp. gained 68.75 cents, to $57.0625, after it reported U.S. sales of cars and trucks rose 10 percent in June. Ford Motor Co. fell 62.5 cents, to $58.375.
Advanced Fibre Communications Inc. plunged $20.9375, to $19.125, after the maker of equipment used to boost the capacity of phone networks warned of lower second-quarter earnings.
Atmel Corp., one of the largest makers of specialty memory chips, fell 12.5 cents, to $13.75, after warning that it will make no money on a per-share basis in the second quarter because of slow sales. It said it will fire 650 employees.
Firstar Corp. rallied to a record $8.1875, to $46.375, after Star Banc Corp. agreed to buy the financial services company for $7.2 billion in stock, more than doubling its assets as it expands ++ in the Midwest. Star Banc fell 25 cents, to $63.625.
Pub Date: 7/02/98