Fed Rate Cut Propels Dow To Another Record

Stocks climbed to record highs for a fourth consecutive session Wednesday after the Federal Reserve came through with a widely expected cut in short-term interest rates.

The Dow Jones industrial average rose 14.09 points to a new high of 5,395.30.

The cut in interest rates by the central bank, followed by a reduction in the prime rate at major banks, raised hopes that an economic expansion that already has lifted stocks to uncharted heights would continue.

The Dow industrials, an index of 30 blue-chip stocks, spent the morning little changed, as investors awaited word from the Fed. It dropped as much as 25 points in early afternoon and an additional 5 points right after the Federal Reserve announced the easing. But the Dow quickly regained its footing and sprang into positive territory.

Advancing issues led decliners by nearly 2 to 1 on the New York Stock Exchange. Volume was heavy at 472.06 million shares as of 4 p.m., topping Tuesday’s pace.

Some of the stocks that moved substantially Wednesday:

NYSE

Ford Motor was unchanged at 29-1/2.

General Motors fell 1 to 52-5/8.

Ford said its profit tumbled 58 percent to $660 million, or about 49 cents a share, in the fourth quarter of 1995, finishing a year in which its earnings fell 22 percent from 1994. GM shares gave back some of Tuesday’s gains, which followed the company’s report of an 18.7 percent increase in fourth-quarter earnings.

Federal National Mortgage Association rose 1 to 34-1/2.

American Express rose 1-1/8 to 46.

Citicorp rose 1-1/4 to 73-7/8.

BankAmerica rose 2-1/4 to 67-3/8.

Interest-sensitive stocks rose after the Federal Reserve cut two key short-term interest rates by .25 percent each.

NASDAQ

Tivoli Systems rose 9-9/32 to 47-1/32.

IBM has agreed to pay $734 million, or $47.50 per share, to buy Tivoli, a midsized software company that helps companies switch from mainframes to networks of smaller computers.

Novell rose 1 to 13-1/2.

Corel rose 13/16 to 11-3/8.

Corel has agreed to buy Novell’s struggling WordPerfect and Quattro Pro software operations for more than $115 million, less than two years after paying $1 billion to buy the word-processing and spreadsheet businesses.

AMEX

Hasbro fell 2-1/8 to 41-1/2.

The toymaker continued to shun Mattel’s $5.25 billion buyout offer.