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): JUNE 7, 2000

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

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

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 June 7, 2000, Stewart & Stevenson Services, Inc. (the "Company") issued the
press release attached hereto as Exhibit 99.1 announcing the Company's Plan to
Sell its Natural Gas Compressor Leasing Business.

Item 7.  Exhibits.

Exhibit 99.1    Company Press Release dated June 7, 2000, titled "Stewart &
                Stevenson  Services,  Inc.  Announces Plan to Sell Natural Gas
                Compressor Leasing Business to Hanover Compressor Company."



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:  June 7, 2000                     By: /s/ LAWRENCE E. WILSON
                                            Name:   Lawrence E. Wilson
                                            Title:  Vice President, Secretary
                                                    and General Counsel

EX-99.1

                                  EXHIBIT INDEX

99.1     Company Press Release June 7, 2000, titled  "Stewart & Stevenson
         Services,  Inc. Announces Plan to Sell Natural Gas Compressor Leasing
         Business to Hanover Compressor Company."

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


FOR IMMEDIATE RELEASE:

STEWART & STEVENSON SERVICES, INC. ANNOUNCES PLAN TO SELL NATURAL GAS COMPRESSOR
LEASING BUSINESS TO HANOVER COMPRESSOR COMPANY

     HOUSTON, TX June 7, 2000 - STEWART & STEVENSON SERVICES, INC.
(NASDAQ:SSSS), HOUSTON, TX a leading manufacturer, distributor, and provider of
service for industrial and energy related equipment, and a manufacturer of
medium tactical vehicles for the U.S. Army, announced today that it has executed
a letter of intent to sell the assets of its natural gas compressor leasing
business to Hanover Compressor Company for approximately $60 million in cash and
notes, subject to adjustment for the total amount of assets actually delivered.
The letter of intent also provides for the strategic alliance of the parties in
which Hanover will purchase gas compression equipment and related support from
Stewart & Stevenson, and Stewart & Stevenson will refer subsequent compression
leasing business to Hanover. The sale is subject to definitive documentation,
government approvals and certain other closing conditions, and is expected to be
completed by July 31, 2000.

     Michael L. Grimes, President and CEO of Stewart & Stevenson, said, "Our
compressor leasing business is an established market leader in the Powder River
Basin of Wyoming and we are pleased to combine that business with Hanover. We
believe that the best interests of our customers, employees, and shareholders
will be served by the completion of this transaction."

     Stewart & Stevenson will continue to manufacture natural gas compression
equipment for sale within the industry.

     Hanover Compressor Company is the market leader in full service natural gas
compression and a leading provider of service, financing, fabrication and
equipment for contract natural gas handling applications. Hanover provides this
equipment on a rental, contract compression, maintenance and acquisition
leaseback basis to natural gas production, processing and transportation
companies that are increasingly seeking outsourcing solutions. Founded in 1990
and a public company since 1997, its customers include premier independent and
major producers and distributors throughout the Western Hemisphere.

This press release includes forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Stewart & Stevenson believes that its expectations, as
expressed in these statements, are based on reasonable assumptions regarding the
risks and uncertainties inherent in achieving those expectations. These
statements are not, however, guarantees of future performance and actual results
may differ materially. The most important factors that may cause actual results
to differ from our expectations are the risks associated with negotiation of a
definitive agreement and receipt of regulatory approval for the sale of the Gas
Compression Leasing Business. Other risk factors are listed in Stewart &
Stevenson Services, Inc. annual report to the Securities and Exchange Commission
on Form 10-K for the year ended January 31, 2000.

Contact:          Mr. David R. Stewart, Treasurer
Phone:            (713) 868-7657
Fax:              (713) 863-1519
Email:            d.stewart@ssss.com
                  HTTP://www.ssss.com