Stocks Advance but Trading Is Cautious

Stock prices nudged ahead Thursday, easing some from a morning rally.

The Dow Jones index of 30 industrials rose 7.50 to 2,311.43, on top of a 22.68-point gain Wednesday.

Stock trading was cautious ahead of today’s report on the December merchandise trade deficit, which will guide financial markets by indicating whether U.S. goods are too costly abroad. Economists predict that the U.S. trade gap narrowed to $11.8 billion in December from $12.5 billion in November.

“I don’t think you’ll see people making bets until tomorrow,” said Tom Gallagher, head trader at Oppenheimer & Co.

“You can’t make too many solid assumptions with this trade figure coming tomorrow morning. People tend to play their cards a little close to the vest,” added Tom Callahan, Yamaichi International senior vice president in U.S. equities.

Stocks shrugged off news of a surprisingly robust gain in U.S. housing starts last month, indicating that the economy continues to boom and interest rates may be raised to ward off inflation, traders said.

New construction of houses and apartments surged 8.0% in January to an almost two-year high, the Commerce Department reported in the morning.

Advances outnumbered declines by more than 4 to 3 in nationwide trading of issues listed on the New York Stock Exchange.

Volume on the floor of the Big Board came to 177.45 million shares, up from 154.22 million in the previous session.

Saatchi & Saatchi Co. stock rose on rumors the company may be a takeover candidate. Saatchi, the world’s largest advertising agency, closed up 1 3/4 at 22 1/2.

Philip Morris Gains

Church’s Fried Chicken climbed 1 1/4 to 10 1/4 in active trading. The company agreed to be acquired by A. Copeland Enterprises for $11 a share in cash and securities.

Merck rose 1 to 64 3/4 following word that researchers at the company have found what they describe as a promising approach toward combating the virus that causes AIDS.

Other gainers among the blue chips included Philip Morris, up 2 1/4 at 110 3/4; DuPont, up 1/8 at 97 7/8; Procter & Gamble, up 1/2 at 91 1/8; Eastman Kodak, up 1/4 at 47 5/8, and Coca-Cola, up 3/8 at 48.

Coca-Cola raised its quarterly dividend from 30 cents a share to 34 cents a share.

Bank of New York rose 5/8 to 42, hitting a 52-week high. The company said it expects annual earnings growth of 15% to 20% through 1991, somewhat more than its historical targets.

Navistar International held steady at 6 1/8. The company posted profits for its fiscal first quarter ended Dec. 31 of 12 cents a share, against 15 cents a share in the comparable period a year earlier.

The Tokyo Stock Exchange’s leading index fell from its latest record high as cautious investors began selling. The 225-issue Nikkei index, which climbed 166.59 points to a record closing of 32,149.48 on Wednesday, fell in the afternoon trading that left the index at 32,083.58 at the close, down 65.0 points

London Stock Exchange prices fell amid continued concern about the outlook for world interest rates as traders sat back to await today’s release of British inflation figures. The Financial Times 100-share index ended 13.7 points down at 2,033.8.