Dow Hits New Record

Blue-chip stocks surged more than 130 points to close at a record high Friday, as bond interest rates tumbled after U.S. May payrolls data eased market fears of an interest rate hike by the Federal Reserve. The Dow Jones industrial average rose 130.49 points to close at 7,435.78, surpassing its previous record of 7,383.41 set on May 27. In the broader market, advancing issues led declines by about a 17-7 margin on volume of about 492 million shares on the New York Stock Exchange. The Nasdaq composite index rose 14.80 points to 1,404.85.

Jobless Rate Drops, Growth Slows

The U.S. Labor Department said Friday the unemployment rate fell to the lowest level in nearly 24 years in May but the pace of job growth slowed markedly. The employment data is the government's first major glimpse of the economy's health each month. The May report offered a mixed reading ahead of the Federal Reserve's early July meeting on interest rates and sparked a powerful rally in financial markets. The government said the unemployment rate fell to 4.8 percent in May, the lowest level since October 1973, from April's 4.9 percent. But payrolls grew by just 138,000 after surging by 323,000 in April. Job growth was the slowest since the 36,000 jobs added outside of the farm sector in September. Fed policy-makers have been worried that the tight job market will encourage workers to demand big pay hikes, stoking inflation down the road.

Excel to Buy Telco

Excel Communications says it has agreed to buy Telco Communications Group in a $1.2 billion deal that will create the fifth largest long-distance company in the United States. The deal will create a communications company with 6.3 million customers, a 100,000-mile fiber optic network and revenues of about $2 billion, and generate substantial cost savings for Excel, officials said. Chantilly, Va.-based Telco currently offers discounted long-distance telephone services. Industry analysts said Friday the acquisition will provide Dallas-based Excel with the network it needs to continue growing and should also boost profit margins. Excel stock jumped $2.125 to $20.875 in late trading on the New York Stock Exchange, and Telco stock jumped $3.875 to $25.875 on the Nasdaq market.

Xerox to Buy Out Partner

Xerox is announcing plans to buy for $1.5 billion the remaining 20 percent stake in its 41-year-old Rank Xerox office equipment joint venture from its partner, Britain's Rank Group Plc. Xerox suspended a $1 billion stock buyback program to help fund the acquisition. Rank had been eager to sell its remaining stake as part of its goal of focusing on its core restaurant and entertainment business, Rank and Xerox officials said in separate interviews. Rank Xerox manufactures Xerox products, systems and supplies and markets them in more than 80 countries in Europe, Asia and Africa. The venture also owns a 50-percent stake in Fuji Xerox.

Avis Seeks IPO

Avis Rent A Car, a unit of HFS Inc., has filed for an initial public offering of up to $250 million of common stock. Avis also has applied to the New York Stock Exchange to trade under the stock symbol "AVI." In its filing with the Securities and Exchange Commission in Washington, the Garden City, N.Y.-based car rental company did not provide other details on the amount of stock being offered, the estimated initial price, or the number of shares outstanding after the offer. Net proceeds will be used to repay debt and for general corporate purposes, including future acquisitions, Avis said.

Broker Gets Tax Break, Will Hire

Merrill Lynch is about to go on a hiring binge. The largest U.S. stockbroker says it will expand operations in New York City and create up to 2,000 new jobs -- in exchange for $27.6 million in sales tax exemptions. The 15-year deal, which took three months of negotiations, provides for $17 million in sales tax exemptions if New York-based Merrill maintains its current city work force of 9,000 -- plus an additional $10.6 million if Merrill creates the additional 2,000 jobs, the city's Economic Development Corp. said. The brokerage will also buy a 700,000-square-foot Manhattan office building to consolidate offices scattered throughout the city.

Inventories Drop in April

Inventories of unsold goods on U.S. wholesalers' shelves have dropped for the first time in seven months. The Commerce Department says overall inventories fell 0.7 percent in April to a seasonally adjusted $257.64 billion. It is the first monthly decline since an identical 0.7 percent fall last September. April's decline comes after a revised 0.5 percent increase in March. The department also says total wholesale sales were flat during April, at $210.19 billion, after falling a revised 0.8 percent in March. Previously, the department said March sales had declined 0.9 percent.

First Brands Stock Slide

Shares of First Brands Corp., which makes Glad plastic wrap and plastic bags, are taking a beating on Wall Street. Shares fell more than 12 percent Friday after the company warned that it expects earnings to fall short of expectations. That caused the stock to lose $3.375, closing at $22.625 on the New York Stock Exchange. First Brands says it expects the disappointing results partly as a result of softness in the plastic wrap and plastic bag markets. The company, which also makes STP automotive products, said inventory reductions by automotive retailers and its above-average advertising and promotional spending also would dampen results.

FPA to Buy Healthcap

FPA Medical Management, a national physician practice management company, says it has a definitive agreement to acquire Healthcap in a stock deal. An FPA spokesman said he could not immediately elaborate on financial terms of the pooling of interests transaction. FPA, which is based in San Diego, says the merger would expand its services to Missouri and Nevada and is expected to increase 1997 revenues to more than $1 billion. Healthcap, also based in San Diego, provides services to more than 300,000 enrollees, FPA said. The deal is expected to close at the end of the month.

Dollar Collapses Against Mark

The dollar collapsed Friday after surging to a 39-month high against the German mark as dealers booked profits ahead of a European finance ministers' meeting. The U.S. currency briefly soared to 1.7423 marks -- its highest level since February 1994 -- after employment reports in the United States and Germany showed the sharply divergent prospects of the two economic powerhouses. However, the dollar rally soon reversed as speculative traders who had previously bought dollars cashed in their profits. The dollar closed near its session lows, falling to 1.7247 marks from 1.7380 at the open and 1.7290 at Thursday's close. The dollar also slipped to 114.40 yen from 115.72 Thursday.

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