STOCKS : Dow Climbs 13.87 on Better Earnings News
A sprinkling of good earnings reports and a spurt of late-session buying helped stocks end a three-day losing spell Thursday.
But gains were limited and volume moderate as investors showed restraint because of renewed caution about the economy.
The Dow Jones industrial average gained 13.87 points to 2,980.10. In the broad market, rising stocks beat losers 872 to 645 on the New York Stock Exchange, on weak volume of 145.80 million shares.
“It was a combination of (computer-driven buy) programs and people nibbling again. There were some decent earnings reports,” said Robert Walberg, analyst at MMS International.
But the overall mood remained wary after a government report Wednesday showed a 1.6% drop in durable goods orders last month. “That might indicate this economic recovery will be short-lived,” said trader Jeff Kaminsky at Mabon Securities.
“It’s too early to make the call (on the economy) but it’s not too early to be cautious.”
Among the market highlights:
* Digital Equipment jumped 2 7/8 to 69 7/8 after reporting better-than-expected fourth quarter profits. Also gaining on surprising earnings reports were Goodyear, up 1 5/8 to 38; AST Research, up 3/4 to 25; and UAL (parent of United Airlines), up 3 3/4 to 141 1/4.
* On the downside, Data General dropped 1 5/8 to 16 7/8. It reported improved quarterly results, but also said it was “very cautious for the short term.” And financial services firm Dreyfus lost 1 1/2 to 33 1/2 after a Prudential Securities analyst cut earnings estimates.
* Among Southland firms, Avery Dennison inched up 1/4 to 23 3/4. The adhesives firm reported a 31% drop in quarterly profits, but still raised its dividend 11%. Waste-disposal firm International Technology added 1/8 to 8 1/4. It said profits fell 17% in the latest quarter, but that it will record a pretax gain of $7 million in the current quarter on the sale of investments.
* Koll Management, the Newport Beach-based real estate management firm, went public at 10 a share on the NASDAQ market. The stock closed at 10 1/4.
Overseas, Tokyo’s 225-share Nikkei average closed 35.24 points higher at 23,332.71. In Frankfurt, the DAX average ended 7.27 points lower at 1,614.42. In London, the Financial Times 100-share average slipped 0.9 points to 2,579.6.
Credit
Bond yields fell again after the government reported a jump in unemployment claims, which gave further evidence that the economic recovery may be shaky.
The price of the Treasury’s 30-year bond rose 3/8 point, or $3.75 per $1,000 in face amount. Its yield fell from 8.41% Wednesday to 8.38%--lowest since June 6.
The government said the number of people filing claims for unemployment benefits rose by 30,000 in the week ended July 13.
It was the second weekly gain and sent the weekly number of new claims up to an unnerving 425,000.
Signs of economic sluggishness often boost bond prices because they increase the likelihood the Federal Reserve will lower interest rates further.
The federal funds rate, the interest on overnight loans between banks, was quoted at 5.813%, up from 5.25% late Wednesday.
Currency
The dollar advanced in a largely technical session that saw the currency recover some of its losses the previous day.
Some traders bought dollars to cover exposed positions, while others were inspired by speculation about economic problems in Germany and their potentially depressing effect on the German mark, said Curtis Perkins, exchange trader at Chemical Bank.
In New York, the dollar rose to 1.759 German marks, up from 1.738 Wednesday. The dollar also rose to 138.85 Japanese yen from 137.50.
Commodities
Coffee futures prices sagged to their lowest level in almost 18 months on New York’s Coffee, Sugar & Cocoa Exchange, extending a price slide linked to mild weather in Brazil and a seasonal slump in demand.
On other commodity markets, grain and soybean futures were mixed; silver futures rallied though gold was little changed; energy futures were mixed, and livestock and meat were mixed.
Coffee futures settled 1.3 to 1.55 cents lower in New York, with the contract for delivery in September at 80.85 cents a pound, the lowest settlement of a near-term coffee contract since Feb. 6, 1990.
Near-term coffee traded at $1 a pound as recently as March.
Silver futures rose sharply on New York’s Comex in a partial recovery from Wednesday’s 28-cent plunge. Analysts cited short-covering, a form of profit-taking in which those who sold contracts Wednesday bought them back at lower prices on Thursday.
Silver ended 6.2 to 6.7 cents higher, with July at $4.05 an ounce; gold was unchanged to 10 cents higher, with August at $364.70.
Crude oil futures fell modestly on the New York Merc amid speculation that Iraqi oil will soon be allowed back onto the world market.
The September contract for light, sweet crude fell 6 cents to $21.46 per 42-gallon barrel.
