Computer stocks lead d new rally

Tuesday, Nov. 19, 1996 | 11:59 a.m.

"The market is up and running again," said John Niedenberger, a money manager at Advanced Investment Management with $3.5 billion in assets. "Lower rates coupled with technology are giving the market another push."

The Dow industrials rose 46.22 to 6,393.13, resuming a 10-day advance interrupted Monday, within seven points of their fourth century mark this month.

Hewlett-Packard shares rose $2.125 to $51.875 even though the computer maker's fiscal fourth-quarter earnings fell short of Wall Street expectations. Merrill Lynch & Co. raised earnings estimates for the company to $3 a share from $2.75 to $3, citing order growth at the computer maker.

"People are looking past the earnings to the growth rate and that is helping," Ciardullo said. Orders for computers grew 20 percent in the quarter, a rate Merrill referred to as "excellent." Compaq Computer Corp. rose $2.50 to $78.625, IBM rose $3.375 to $150.125 and Intel Corp. gained $2.75 to $118.125.

The broader S&P 500 rose 4.12 to 741.14, and the Nasdaq Composite Index climbed 2.19 to 1,256.76.

U.S. bonds gained, helping stocks, after a weaker-than-expected housing report bolstered expectations that the economy is growing slowly enough to allow interest rates to stabilize or fall. The yield on the benchmark 30-year Treasury bond dropped 3 basis points to 6.43 percent. Low interest rates translate into lower borrowing costs and wider profit margins as a result.

The Commerce Department said new home starts fell 5.1 percent in October to an annual rate of 1.366 million units, the slowest pace in a year. Economists expected a 0.2 percent increase. said John Niedenberger, money manager at Advanced Investment Management with $3.5 billion in assets.

Shares of financially sensitive companies rose in reaction to move in bonds.

Chase Manhattan Corp. rose $1.50 to $91, BankAmerica Corp. gained $3.375 to $99.375 and NationsBank rose $1 to $98.125.

"The financials have more up side coming from the bond market," Niedenberger said.

Retail shares got a boost from unexpectedly strong earnings reports from Dayton Hudson Corp. and Limited Inc.

Dayton Hudson reported profit from operations of 51 cents a share, well above the 41 cents analysts expected. Its shares rose $1.375 to $37.75.

Limited reported net income of 15 cents a share, more than the 13 cents analysts expected and an increase from the 10 cents the company earned pro forma a year ago. Its shares gained 62.5 cents to $18.125. Gap Inc. rose 62.5 cents to $31.125.

CD Radio Inc. shares shed more than half their value after a panel appointed by federal regulators said the company shouldn't get a preferential satellite radio license. The stock plunged as much as $5.375 to $3 in the first 20 minutes of trading, and recently was down $3.875 at $4.50.