Stocks Finish Higher; Bonds Drop

Stocks rose Tuesday, defying a drop in bond prices, as investors got confirmation that the Federal Reserve was leaving short-term interest rates unchanged and as IBM regained some lost ground.

The Dow Jones industrial average finished up 39.98 to close at 6,308.33. The blue-chip index fell by 32 points at the open but climbed back into positive territory by late morning.

Investors drove blue-chip prices higher in relief after the Fed said it would leave rates alone.

Declining issues narrowly led advancers on the New York Stock Exchange. NYSE volume was heavy at 519.84 million shares.

The Standard & Poor’s 500-stock index rose 5.06 to 726.04, the NYSE’s composite index rose 1.92 to 382.77, and the Nasdaq composite index rose 5.34 to 1,266.32. But the American Stock Exchange’s market value index declined 2.26 to 570.31.

Some of the stocks that moved substantially or traded heavily Tuesday:

NYSE

Micron Technology Inc. fell 2-1/2 to 32-1/4.

The Boise-based maker of memory chips for computers reported a 95 percent plunge in quarterly profits to 10 cents per share, from $1.51 per share last year, due largely to collapsing prices. The performance was above analyst expectations. Merrill Lynch & Co. lowered its fiscal 1997 estimate for the memory chip maker to $1.50 a share from $1.95. But Robertson Stephens & Co. raised its estimate to $1.00 from 95 cents.

NASDAQ

Intel Corp. rose 2-3/4 to 130.

The computer chip company and the Energy Department’s Sandia National Laboratories in Albuquerque, N.M., said they had developed a computer that does more than 1 trillion calculations in a second, as many as the U.S. population could do on hand calculators for 125 years.

Microsoft Corp. rose 3-1/8 to 79-7/8.

The software company said it signed a 3-year deal to supply MCI Communications Corp. with Windows operating systems, Internet browsers and other software.

PriceCostco Inc. rose 1 to 24-1/8.

The Issaquah holding company for cash-and-carry membership warehouses posted a first-quarter net income of 34 cents a share before special charges, up from 25 cents a year ago. The results were 4 cents above analysts’ average expectations.

AMEX

TWA fell 1/8 to 7-5/8.

The airline named three directors as interim managers to succeed chief executive Jeffrey Erickson, who resigned. A two-month search for a new leader has thus far been frustrated.