At&T; Leads Stock Market Rally

Blue-chip stocks rose Wednesday, led by AT&T, after the telephone giant surprised Wall Street by saying it will split into three publicly traded companies.

The Dow Jones industrial average gained 25.65 to 4,792.69. Of that 25 points, nearly 18 were attributable to AT&T.

Advancing issues edged out decliners by 8 to 7 on the New York Stock Exchange. Big Board volume was heavy at 399.41 million shares as of 4 p.m., topping the 371.12 million logged on Tuesday.

Some broad market indexes set records.

“What’s carrying the market, obviously, is one stock, and we know the stock,” said Peter Anderson, chief investment officer at IDS Advisory Group in Minneapolis. “If we take telephone (AT&T) out of it, the market is flat. In fact, I think the market looks a little toppy.”

Michael LaTronica, market analyst at Gruntal Securities, was less downbeat about the market’s performance.

He said investors have largely finished driving stocks lower after concluding last week that the Federal Reserve probably will not lower interest rates at its policy meeting beginning Sept. 26.

Some of the stocks that moved substantially Wednesday:

NYSE

AT&T rose 6-1/8 to 63-3/4.

The telephone giant said it plans to split into three publicly traded companies. Under a plan approved by directors, current AT&T shareowners would receive shares in each company, and a fourth business, AT&T Capital Corp., would be sold. AT&T said it will incur a one-time, pretax charge estimated at about $1.5 billion against third-quarter earnings.

Colgate-Palmolive fell 4-5/8 to 67-1/8.

The personal-products maker said it will restructure its manufacturing and administrative operations, resulting in a loss for the third quarter after a restructuring charge of $369 million, or $2.54 per share.

Caterpillar rose 1 to 59-7/8.

The stock dropped 6-1/2 on Tuesday after the farm- and construction- equipment maker warned that its third-quarter earnings would disappoint. In an unusual reversal, NatWest downgraded Caterpillar shares on Tuesday but then quickly reinstated a “buy” recommendation.

NASDAQ

SHL Systemhouse rose 5-1/64 to 12-41/64.

MCI Communications fell 5/8 to 25-7/8.

MCI agreed to buy SHL for about $1 billion, or $13 per share. MCI said it will combine its existing professional services network management business with SHL and run the new entity as a stand-alone company.