Big Companies Lead Stock Market Rally
In an unusual display of confidence before a major report on inflation, investors bid many stock market indicators to record highs Monday.
The Dow Jones industrial average rose 64.46 to 5,582.60, leaping higher at mid-afternoon after spending most of the session with a gain of 10 to 20 points. The barometer of 30 big U.S. companies has now rebounded by more than 240 points since sliding below 5,400 last week amid worries about inflation and increasingly competitive bond yields. But it remains more than 100 points below the April 3 record of 5,689.74.
Most noticeable among Monday’s record-setters was the Standard & Poor’s 500-stock index, which hadn’t hit a new high since early February.
Monday’s rally, which also boosted several other major indexes to record closes, came a day before Tuesday’s report on inflation in consumer prices during April. Although trading did slow Monday, the mood was notably more optimistic than on the eve of other major economic reports.
Some of the stocks that moved substantially or traded heavily:
NYSE
Healthsource, down 7-3/4 at 24-1/8.
The managed care company reported strong enrollment growth but lower-than-expected earnings for the first quarter. Healthsource earned $419 million, or 22 cents a share, for the period. Afterwards, Merrill Lynch reportedly lowered an investment rating on the stock.
Guangshen Railway, up at 20-1/4 from initial offering at 19.
The Chinese railroad’s stock traded for the first time after an initial public offering of nearly 25 million American depositary shares sold for $19 each. Guangshen operates the only rail line in the fast-growing region between Guangzhou, 90 miles northwest of Hong Kong, and Shenzen, the city at Hong Kong’s border. Guangshen expected the shares to be sold at $16 to $19.
Morrison Knudsen, down 1-1/4 at 1-1/4.
The financially beleaguered Boise-based engineering concern confirmed it is discussing a merger with a construction company controlled by Montana businessman Dennis Washington. But MK said any possible merger deal would mean a reduction in value to shareholders. The company reiterated that it planned to go ahead with its financial restructuring efforts whether or not it reached a deal with the Washington Construction Group.
NASDAQ
System Software Associates, down 4-1/2 at 19-5/8.
The maker of manufacturing software said it expects break-even results for the second quarter ended April 30, despite record revenue of slightly more than $100 million. System Software said professional services revenue declined during the period while service expenses increased.
Micom, down 2-1/4 at 11-3/4.
Northern Telecom said it plans a $137.4 million takeover of the maker of computer-networking devices.