Scent Of Lower Rates Helps Dow Gain 52.4

Stock prices surged to record levels Monday, fueled by a rally in the bond market on expectations that the Federal Reserve would soon lower interest rates.

The Dow Jones industrial average rose 52.39 to 5,139.52, topping the all-time high set last Wednesday. It was the 66th record for the blue-chip index this year.

Broad-market indexes were also ahead, with the Nasdaq composite, New York Stock Exchange’s composite index and the Standard & Poor’s 500-stock index also at new highs.

“Bonds getting down to around 6 percent was the spur of this market,” said Larry Wachtel, vice president at Prudential Securities Inc. “Then we saw the Dow hit new heights and the Nasdaq come back strong, and it was a powerful day overall.”

Advancing issues led decliners by about 13 to 6 on the NYSE. Big Board volume totaled 405.09 million shares as of 4 p.m., vs. 392.66 million Friday.

Some of the stocks moving substantially or trading heavily:

NYSE

General Motors, up 1-7/8 at 51-1/4.

The Detroit-based automaker’s chairman, John G. Smale, will leave that post Jan. 1. He will be replaced by Jack Smith, who also will continue as president and chief executive of GM.

LSI Logic, up 4-1/2 at 45.

The Milpitas, Calif.-based company said it has developed a new microchip technology that can serve as the electronic brains of a totally new generation of consumer products dedicated to connecting with the Internet.

Hewlett-Packard, up 7/8 at 82-3/4.

The Palo Alto, Calif., computer maker will cut the prices of some of its Pentium-based products by up to 16 percent.

NASDAQ

Microsoft, up 1-5/8 at 87-7/8.

Justice Department investigators want to know if Microsoft Corp. wrote its Windows 95 software expressly to block rival programs that give users access to the global computer network known as the Internet. Microsoft said Monday that some problems arose during testing earlier this year, but that the kinks have been worked out with the newer versions of most competitors’ software.

Sun Microsystems, up 5-1/2 at 89-7/8.

Netscape, up 12-1/4 at 149-1/2.

Netscape Communications Corp. and Sun Microsystems Inc. joined to promote a simpler version of Sun’s Internet programming language, hoping to head off Microsoft Corp.’s expected foray into the market. The two companies plan to push JavaScript, a language for creating programs that can be shared on-line.

AMEX

Samuel Goldwyn Co., up 9/16 at 5-1/16.

Analysts speculated that the Los Angeles-based independent movie studio may be sold. PolyGram NV and Walt Disney Co. are among the rumored buyers.