8-K

               SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C. 20549


                            FORM 8-K

                         CURRENT REPORT


                PURSUANT TO SECTION 13 OR 15(d)
             OF THE SECURITIES EXCHANGE ACT OF 1934

DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): OCTOBER 19, 1998


               STEWART & STEVENSON SERVICES, INC.
     (Exact name of registrant as specified in its charter)


          Texas                       0-8493              74-1051605
(State or other jurisdiction   (Commission File Number)   (I.R.S. Employer
      of incorporation)                                   Identification No.)


    2707 North Loop West
       Houston, Texas                                           77008
(Address of principal executive offices)                     (Zip code)


    Registrant's telephone number, including area code: (713)  868-7700


Item 5.   Other Events.

On October 19, 1998, Stewart & Stevenson Services, Inc. (the
"Company") issued the press release attached hereto as Exhibit
99.1 announcing that it has reached agreement with General
Electric Company ("GE") regarding adjustments to the purchase
price and other matters relating to the sale of the Company's Gas
Turbine Operations to GE.

Item 7.  Exhibits.

Exhibit 99.1   Company Press Release dated October 19, 1998
               titled "Stewart & Stevenson Reaches Agreement with
               General Electric Regarding Sale of Gas Turbine
               Operations."

     
                           SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.


                               STEWART & STEVENSON SERVICES, INC.



Date: October 19, 1998

                                /s/  Robert L. Hargrave
                               By:______________________
                               Name: Robert L. Hargrave
                               Title:    President and Chief Executive Officer


                          EXHIBIT INDEX
                                
99.1 Company Press Release dated October 19, 1998 titled "Stewart
     & Stevenson Reaches Agreement with General Electric
     Regarding Sale of Gas Turbine Operations."

__________________

EX-99.1

                        EXHIBIT 99.1
 
 
News From:

Stewart & Stevenson
Corporate Headquarters
P.O. Box 1637
Houston, TX  77251-1637
 

FOR IMMEDIATE RELEASE:


 STEWART & STEVENSON REACHES AGREEMENT WITH GENERAL ELECTRIC
          REGARDING SALE OF GAS TURBINE OPERATIONS
                              
                              
HOUSTON, TX - OCTOBER 19, 1998- STEWART & STEVENSON
SERVICES, INC. (NASDAQ:SSSS), a leading manufacturer and
distributor of industrial and energy related equipment, is
pleased to announce that it has reached agreement with
General Electric Company regarding adjustments to the
purchase price and other matters relating to the sale of
Stewart & Stevenson's Gas Turbine Operations to GE.  The
sale of the Gas Turbine Operations, which closed earlier
this year, provided for the payment by GE of $600 million to
Stewart & Stevenson, subject to post-closing adjustment for
the value of the net assets, completion of backlog contracts
and other matters.  Today's settlement will require Stewart
& Stevenson to pay GE $84 million and will result in an
after tax charge to earnings from discontinued operations,
net of disposition accruals, of approximately $20 million or
$.71 per share for the third quarter ending October 31,
1998.  After adjustment, the sale of the Gas Turbine
Operations resulted in net proceeds to Stewart & Stevenson
of $516 million and an after tax gain of approximately
$41.3 million or $1.25 per share.



Contact:

David R. Stewart, Treasurer
Phone:  713-868-7657
Fax:    713-863-1519
HTTP:   //www.ssss.com