Spending Expectations Drive Stocks Higher

Stock indexes sprinted to a second week of new highs as traders, deciding that households will spend freely for the holidays and into the first quarter of 1997, pushed consumer shares higher Monday.

The Dow Jones industrial average gained 35.78 to 6,255.60, topping Friday’s record close and setting a new high for the fourth session in a row.

The New York Stock Exchange, Nasdaq and Standard & Poor’s 500-stock indexes also reached new highs, although they posted narrower gains.

But the American Stock Exchange’s market value index declined slightly, and traders expressed some caution that the rally has been confined to blue-chip names.

“The strength was in blue chips rather than the broad list,” said Larry Wachtel, a market analyst at Prudential Securities. “But under the umbrella of the strength in blue chips, there is a correction taking place.”

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

NYSE

PHH Corp. rose 17 to 47-1/4.

HFS Inc. fell 1-1/4 to 72-7/8.

HFS Inc. agreed to acquire PHH Corp., a vehicle management, relocation and mortgage banking company, in a stock swap that values PHH at about $1.7 billion, or $49.50 a share. HFS, owner of the Avis Inc. car-rental company, said it expects to take an undisclosed one-time charge in the 1997 first quarter in connection with the merger.

Bergen Brunswig fell 5-1/8 to 27-5/8.

Glaxo Wellcome PLC’s American Depositary shares unchanged at 31-3/8.

Bergen Brunswig, one of the biggest drug wholesalers in the U.S., and Ivax, a larger maker of generic drugs, agreed to a $1.65 billion merger. A a new company, BBI Healthcare, will acquire the combined company in a stock swap.

Texaco Inc. rose 1-1/4 to 97-1/8

The company is in formal talks to settle a 1994 race-discrimination suit in which employees are seeking $71M in back pay, reports The Wall Street Journal. Meanwhile, there were reports that an internal investigation showed that a senior Texaco executive did not use a racial slur at a 1994 meeting.

NASDAQ

Rockford Industries fell 4-3/4 to 17-5/8.

The company restated third-quarter earnings to 17 cents a share from 22 cents, and second-quarter earnings to 17 cents from 21 cents, citing costs associated with the sale of certain direct finance leases in its portfolio.

U.S. Robotics Corp. rose 4-7/8 to 68-7/8.

The Skokie, Ill. company introduced the Managed MP/8 8-port modem pool solution that provides a modem concentration point for remote users to connect to a corporate local area network or access the Internet and on-line services. The MP/8 allows network managers to remotely configure and manage their modem systems.