Stock Market Races Toward New Highs

Stocks sprinted higher on Monday on renewed hopes for lower interest rates.

The Dow Jones industrial average gained 22.47 close at 4,446.46, more than reversing last week’s 20-point loss but still 38 points shy of its alltime closing high set last Tuesday.

Investors responded positively to Sunday comments by Federal Reserve Chairman Alan Greenspan that the probability of a mild U.S. recession had increased.

Greenspan’s comments gave new life to hopes that the Fed would cut interest rates this year, especially after two White House aides were quoted as viewing an easing favorably.

Monday’s market gains were “based on a big shift in perception that the Fed was going to lower interest rates because the economy was soft,” said Thomas J. Czech, portfolio manager at Summit Investment Management in Milwaukee.

In overseas stock markets, the Nikkei average in Tokyo lost 1.5 percent, closing below 15,000 for the first time in nearly three years. Frankfurt’s DAX index was finished down 0.11 percent, but the FT-SE 100 in London was up 0.60 percent.

Some of the stocks that moved substantially or traded heavily:

NYSE

IBM rose 1 to 90 1/8.

Lotus agreed to be acquired by IBM for $3.52 billion cash, or $64 per share, caving in to a sweetened bid in less than a week. Lotus was unchanged at 62 7/8.

Disney rose 1 5/8 to 59.

The entertainment company’s stock rose sharply after a Smith Barney analyst said “Pocahontas” could boost revenues by $700 million, or 80 cents per share.

Rubbermaid fell 7/8 to 26.

The kitchen equipment maker’s stock fell for the second session after the company said on Friday that this quarter’s earnings would be hurt by a rise in plastic resin costs that could not be passed along to its customers.

National Semiconductor fell 1 1/4 to 26 7/8.

Fourth-quarter earnings fell to 62 cents per primary share from 63 cents.

NASDAQ

Chiron rose 6 7/8 at 61 3/4.

Cephalon rose 7 7/8 to 18 3/8.

Cephalon said Phase III clinical studies showed its Myotrophin drug, which it is developing with Chiron, lessened the severity and slowed the progress of amyotrphic lateral sclerosis, or Lou Gherig’s disease.

AMEX

U.S. Bioscience rose 2 1-16 to 5 5-16.

Merrill Lynch upgraded its nearterm rating to “above average” from “below average,” after the U.S. Food and Drug Administration recommended its ethyol treatment.