FINANCIAL MARKETS : STOCKS : Dow Breaks Losing Streak, Climbs 28.63
Blue chip stocks snapped a two-day losing streak Thursday, rebounding as bargain hunters scooped up shares of technology companies smashed during the market’s recent slide.
The Dow Jones industrial average rose 28.63 points, or 1%, to 2,894.01. Advancing issues outnumbered losers in nationwide trading of New York Stock Exchange-listed stocks, with 989 up, 569 down and 509 unchanged.
Big Board volume continued to seesaw, falling to 154.46 million shares from 193.11 million on Wednesday.
The Dow had fallen in three of the four previous sessions, and on Wednesday briefly broke through the key 2,850 level that has been the floor since late February.
Analysts were encouraged that the market rebounded well above 2,850 Thursday, though the action was somewhat muted. “This is the buying opportunity everybody was dying for. Now that it’s here, people are scared to take the opportunity,” said Peter Canelo, analyst at County NatWest.
Buying was restrained by uncertainties over the health of the economy and worries about corporate earnings.
On Wednesday, Compaq Computer’s grim profit forecast had triggered a 27% tumble in its stock and dragged the Dow down with it.
Compaq provided some relief Thursday after announcing plans to buy back up to 12% of its stock. Compaq closed at 35 3/4, down 1/4 but up from a low of 34 3/8 during trading.
Among the market highlights:
* Hewlett-Packard helped bring buyers back to tech stocks after reporting strong second-quarter profits. H-P jumped 2 to 48. Among other techs, IBM gained 1 3/8 to 104 1/8, Microsoft added 1 3/8 to 99 3/8, MacNeal-Schwendler rose 5/8 to 16 1/8 and Motorola rose 1 1/2 to 64 1/4.
But Apple fell 1 1/2 to 49 and Sun Microsystems lost 7/8 to 34.
* Health-care stocks were strong, as Pfizer rose 1 3/8 to 55 5/8, National Medical Enterprises added 1 1/4 to 45 3/8 and FHP International jumped 1 3/4 to 22 1/2.
Food stocks also saw bargain-hunting. Kellogg leaped 3 3/8 to 93 1/2 and Coca-Cola rose 1 1/4 to 55.
* Brokerage stocks, hit hard lately, jumped sharply. Morgan Stanley soared 1 3/4 to 80, Merrill Lynch added 1 1/8 to 37 7/8 and PaineWebber was up 1 1/8 to 21 1/8.
* Loral rocketed 3 1/8 to 43 3/4. Goldman Sachs repeated a “buy” rating and raised its 1992 and 1993 earnings estimates for the defense firm after it reported higher-than-expected 1991 results. Oppenheimer also repeated a “buy” rating.
* Mattel eased 7/8 to 24 1/2. The company said its biggest holder, investment firm Warburg Pincus Inc., was selling 950,000 shares because of the needs of a specific client. But Warburg also said it would exercise warrants for 825,000 more Mattel shares.
* Pacific Enterprises slumped 1 3/8 to 30 1/4, a new 52-week low. A Prudential Securities analyst warned that the company’s dividend, which has been vulnerable for some time, could be cut at the June 4 board meeting. The analyst, as well as a Shearson analyst, reduced 1991 and 1992 earnings estimates for the firm, citing in part troubles at Pacific’s Thrifty drug store chain.
Overseas, the resignation of Bundesbank President Karl Otto Poehl--which had been expected--caused barely a ripple in German stocks, with the DAX average rising 7.73 points to 1,598.08.
In London, the Financial Times 100-share average closed 12.5 points higher at 2,471.9.
In Tokyo, stocks fell on a lack of buying interest. The Nikkei average lost 302.20 points to 25,520.27.
Credit
Bond prices fell slightly at the end of the trading day as the Federal Reserve announced that the nation’s money supply grew faster than expected.
The Treasury’s 30-year bond lost 3/32 point, or 94 cents per $1,000. Its yield inched up to 8.33% from 8.32% late Wednesday.
Yields had fallen in morning trading after the government announced a small increase in the number of people filing initial unemployment claims.
However, robust growth in the money supply figures signaled the Fed might be reluctant to loosen credit further for fear of bringing on higher inflation.
The Fed funds rate, the rate on overnight loans between banks, fell to 5.81% from 6% Wednesday.
Currency
The dollar rose against major currencies in light trading, as traders awaited today’s report on the nation’s balance of trade.
The market all but ignored Bundesbank chief Poehl’s resignation. Traders said they were reassured by comments from German officials that the central bank wouldn’t change its policy of tight money.
In New York, the dollar settled at 1.696 German marks, up from 1.684 Wednesday. Against the yen the dollar rose to 137.45 from 137.15.
Commodities
Silver futures prices tumbled on New York’s Comex as profit taking and panic selling punctured a speculative balloon that had puffed up values significantly in the two previous sessions.
Silver settled 9.2 to 10.7 cents lower, with the contract for delivery in May down 9.2 cents at $4.00 an ounce; gold was $3.70 to $3.90 lower, with May at $356.
Oil futures ended mixed in featureless trading on the New York Merc. Light, sweet crude was 3 cents lower to 42 cents higher, with June at $20.89 a barrel.
Market Roundup, D6
