STOCKS : Dow Gains 27, but Broader Market Drops

Blue chip stock prices closed sharply higher Thursday in a wild session driven by uncertainty over the federal budget, a surprise bond rally and whiplashing computer-trading programs.

Some bad earnings reports caused big stock hits.

The Dow Jones industrial index closed up 27.47 points, or 1.1%, to 2,516.83. Earlier in the day it was down more than 20 points.

The broader market failed to keep pace with the Dow. The Standard & Poor’s 500 index inched up just 0.4%; the NASDAQ over-the-counter composite lost 0.4%.

On the New York Stock Exchange, declining issues slightly outnumbered advances in nationwide trading, with 731 stocks rising, 780 falling and 465 unchanged. Big Board volume came to a moderate 145.41 million shares, against Wednesday’s 135.49 million.

Analysts said some investors bought on the belief that a budget agreement would be passed in Congress. House Speaker Thomas Foley (D-Wash.), after meeting with President Bush in the afternoon, said congressional committees will be able to change part of the $500-billion budget-cutting agreement, a statement that may assuage opponents.

Passage of the budget is expected to nudge the Federal Reserve into lowering interest rates.

“We know the Fed is under enormous pressure from the Administration” to cut rates, said Bank of America Senior Vice President V. Shannon Clyne.

But whether budget optimism sparked Thursday’s surprise bond rally was unclear, traders said. Meanwhile, stock investors had to contend with a flurry of computer buy and sell programs.

“We’ve been roiled by the program people and by what amounts to a great deal of uncertainty,” said analyst Andrew Riley of Yamaichi International.

Among the market highlights:

* The broad market’s weakness may have stemmed from new worries about corporate profits. The news was grim. Ingersoll-Rand tumbled 5 7/8 to 33 1/4 after the machinery firm said its third-quarter results will be below Wall Street expectations. It cited a sudden decline in certain businesses.

Tenneco slumped 4 3/4 to 45 1/4 after a Prudential-Bache analyst cut 1991 earnings estimates 12% on expectations of softer orders for construction equipment. And Hewlett-Packard lost 1 3/4 to 29 1/4 after the computer company said domestic orders slowed in September from August.

* High-tech stocks overall continued to be weak. Sun Microsystems lost 1/2 to 19, Microsoft fell 1 5/8 to 64 1/8 and AST Research gave up 3/4 to 16 3/4. Digital Communications plunged 4 3/8 to 10 5/8 after it reported quarterly earnings off 63%.

* Elsewhere, Carnival Cruise Lines dropped 1 3/4 to 12 after Alex. Brown and Montgomery Securities cut earnings estimates.

* Toro Co., which said it expects to post a loss for the quarter ending Oct. 26, fell 2 3/4 to 12 1/4.

* Among the market bright spots, Ralston Purina rose 2 1/8 to 105, Lilly gained 2 3/8 to 75 1/8, Humana rose 1 to 45 and Time Warner added 2 1/8 to 74 3/8.

Tokyo stocks finished lower in thin, volatile trading amid rebounding oil prices and widespread fears that war would finally break out in the Mideast after a two-month standoff.

The key 225-share Nikkei index ended down 571.20 points, or 2.5%, to 22,278.19.

At mid-day today, the Nikkei was up 785.75 points.

London stock prices also weakened as the market struggled for direction in the absence of fresh news.

The Financial Times 100-share index closed down 16.6 points at 2,070.4. In Frankfurt, Germany, stock prices fell in thin, lackluster trading. The DAX index dropped 22.54 points, or 1.6%, to 1,422.35.

CREDIT

Bond Prices Leap in Slow Trading

Bond prices rose sharply in quiet trading as the market awaited the release of employment figures for September.

The Treasury’s bellwether 30-year bond rose 27/32 point, or about $8.43 per $1,000 face amount. Its yield dropped to 8.79% from 8.87% Wednesday.

Analysts were somewhat at a loss to explain Thursday’s advance. Many were doubtful that buyers were motivated by the outlook for the pending federal budget-cutting pact.

Analysts did report some technical buying, as traders adjusted their positions before the Labor Department’s employment report comes out early today.

The federal funds rate, the interest banks charge one another for overnight loans, was quoted at 8.19%, down from 9% late Wednesday.

The drop was due to technical factors.

In the tax-exempt market, the Bond Buyer index of 40 actively traded municipal bonds rose 1/32 point to 88 25/32.

The average yield to maturity was unchanged at 7.76%.

ENERGY

Crude Oil Prices Slump Late in Day

U.S. crude oil prices, led by a late selloff of gasoline, skidded downward in late trading on the New York Mercantile Exchange after being up earlier in the day.

Crude was supported earlier as markets anticipated that an Iraqi speech at the United Nations would not match the conciliatory tone of President Bush’s address earlier this week.

On the New York Mercantile Exchange, West Texas Intermediate crude for November ended the day down 39 cents at $36.93 a barrel.

It traded as high as $38.25 and as low as $36.30 a barrel.

“A late selloff of gasoline pulled crude down 30 to 50 cents in the last 15 minutes of trading,” said Kirk Kinnear of the Phibro division of Salomon Bros.

On the Merc, unleaded gasoline for November delivery fell 2.28 cents to 90.86 cents a gallon.

COMMODITIES

Pork Belly Rally Loses Momentum

A powerful three-day surge in pork belly futures prices peaked on the Chicago Mercantile Exchange as buying interest sparked by a surprising government hogs-and-pigs report exhausted itself.

Frozen pork bellies for delivery in February closed above Wednesday’s closing price but below the day’s high of 64.9 cents a pound, which represented a gain of nearly 12% since last Friday.

On other commodity markets, livestock futures were mixed, precious metals retreated and grains and soybeans were mixed.

Pork bellies settled 0.65 cent lower to 0.25 cent higher, with February up 0.25 cent to 64.45 cents a pound.

Pork bellies had risen the permitted daily limit of 2 cents a pound Monday, Tuesday and Wednesday in reaction to last Friday’s surprisingly low hogs-and-pigs inventory news.

The Agriculture Department report included an estimate of the number of pigs born during the summer that was 2% lower than in 1989.

Most market analysts had expected summer farrowings to be unchanged or even a little higher than a year earlier.

Precious metal futures, which have shadowed crude oil’s moves since the Persian Gulf confrontation began, fell on New York’s Commodity Exchange.

Gold finished $1.60 to $2 lower, with October at $392.30 an ounce; October silver lost 2.2 $4.67.

Market Roundup, D6