FINANCIAL MARKETS : Dow Rises 21.85 in Biggest Gain Since August

The stock market chalked up its best gain in five weeks Thursday in an advance led by environmental, pharmaceutical and other “growth” issues.

The Dow Jones index of 30 industrials climbed 21.85 to close at 2,694.91, its best showing since Aug. 24 when it jumped 56.53 points.

Advancing issues outnumbered declines by about 5 to 3 in nationwide trading of New York Stock Exchange-listed stocks, with 918 up, 536 down and 503 unchanged.

Volume on the floor of the Big Board came to 164.24 million shares, against 158.40 million in the previous session. Nationwide, consolidated volume in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 196.73 million shares.

The advance was “very selective,” said Larry Wachtel, analyst at Prudential-Bache Securities. “The theme for the day was ‘out of earnings uncertainty and into earnings certainty.’ ”

That meant, he said, a flow of money from technology stocks and other sectors that have lately produced earnings disappointments, to groups like the drug and pollution-control stocks regarded as holding out the promise of steady growth.

IBM shares, down 6 on Wednesday, dropped another 2 1/2 to 109 as the most active Big Board issue. Digital Equipment lost 1 3/4 to 91 7/8 and Hewlett-Packard was down 7/8 at 50 3/8.

In the pollution-control sector, by contrast, three firms hit new highs: Waste Management, up 2 5/8 at 65 3/4; Wheelabrator Technologies, up 2 1/2 at 41 3/8, and Browning-Ferris, up 1 3/8 at 41 3/8.

Gainers among the pharmaceuticals included Abbott Laboratories, up 1 7/8 at 64, and Pfizer, up 1 at 68 3/8. Investors also bid up consumer growth issues such as Philip Morris, up 4 1/2 at 165, and Procter & Gamble, up 3 1/2 at 120 3/4.

AMR Corp. rose 4 3/4 to 83 3/4. Besides rumors of domestic investors eyeing AMR, some market watchers speculated that a deal with Lufthansa Airlines is in the works.

In Tokyo, stocks surged to a record close. The key 225-share Nikkei index climbed 319.41 points, or 0.90%, to 35,689.98.

In London, stock prices fell sharply in thin trading. The Financial Times-Stock Exchange 100-share index fell 39.5 points, or 1.7%, to 2,291.7.

Credit

Bond prices dipped slightly in slow trading.

The Treasury’s closely watched 30-year bond fell 3/32 point, or slightly less than $1 for every $1,000 in face value. Its yield, which rises when the price falls, inched up to 8.25% from 8.24% late Wednesday.

Bonds were hurt after a savings and loan dumped a rumored $800 million worth of mortgage-backed securities on the market and buyers of them hedged by selling bond futures contracts.

But the benchmark 30-year Treasury bond was helped by a Dow Jones News Service report, citing unidentified officials, that said the Resolution Funding Corp. might not begin issuing bonds to bail out the savings and loan industry until next year.

The long bond has been weighed down by prospects that $5 billion of the Refcorp bonds could flood the market in early October.

In the secondary market for Treasury bonds, prices of short-term, intermediate-term and long-term government issues fell about 1/8 point, according to figures provided by Telerate Inc., a financial information service.

Yields on three-month Treasury bills rose to 8.14% as the discount added 6 basis points to 7.88%. Yields on six-month bills were unchanged at 8.26% as the discount remained at 7.83%. Yields on one-year bills increased to 8.43% as the discount advanced 6 basis points to 7.83%.

The federal funds rate, the interest on overnight loans between banks, was quoted at 9.25%, up from 9% late Wednesday.

Currency

The dollar moved mostly higher although central banks again put pressure on the currency, acting on a belief that the dollar’s advance this year could have unpleasant economic consequences.

Gold bullion prices finished with minor changes in the United States after moving lower overseas. Republic National Bank of New York quoted a bid of $366.90 for an ounce of gold at 4 p.m. EDT, up 70 cents from Wednesday’s late bid.

John McCarthy, chief currency dealer at the New York office of the Amsterdam Rotterdam Bank, said trading volume was moderate and punctuated by rounds of central bank intervention.

Activity has slackened in recent days with dealers unwinding positions as the month ends. Trading maneuvers tied to the close of Japan’s fiscal year on Sept. 30 also has reduced liquidity in the currency markets, he said.

“The central banks intervened three or four times,” said McCarthy. “It did have the desired effect--the dollar is closing lower than where it opened in New York” but above Wednesday’s late levels.

In earlier European trading, the dollar rose against most major currencies despite persistent dollar selling by the monetary authorities.

Dealers in London said they received buy orders from traders who expressed confidence in the dollar’s underlying strength.

In earlier Tokyo trading, the dollar closed at 140.85 Japanese yen, down from 141.35. In London late Thursday, the dollar traded lower at 140.45 yen. It was quoted at 140.50 yen in late New York trading, up from 140.32 yen Wednesday.

In London, one British pound cost $1.6085 late Thursday, cheaper for buyers than Wednesday’s late $1.6155. In New York, a pound fetched $1.61065, down from $1.6167 late Wednesday.

Gold bullion prices were mixed in the United States after declining in light trading overseas.

On the Commodity Exchange in New York, gold bullion for October delivery rose to $368.10 an ounce, up 20 cents from Wednesday’s settlement. The September contract closed at $367.60 on Wednesday, its final trading day.

The late gold bid in London was $366.50 an ounce, down from $368.00. The Zurich late bid price was $366.35, down from $368.00.

Earlier in Hong Kong, gold closed at $366.45 bid, down from $369.25.

Silver bullion traded late in London at $5.27 bid an ounce, down from $5.28. On New York’s Comex, silver bullion for October delivery rose to $5.265 an ounce from Wednesday’s settlement of $5.252. The September contract finished Wednesday at $5.245.

Commodities

Corn futures prices rose sharply on the Chicago Board of Trade, leading other grain and soybean futures higher on speculation that the Soviet Union was shopping for up to 3 million metric tons of U.S. corn.

On other commodity markets, energy futures rose, precious metals advanced slightly and livestock and meat futures were mixed.

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