Dow Rises 21 After Four-Day Losing Streak : Market Overview

Highlights of Tuesday’s market activity, compiled from Times staff and wire reports:

* Stocks closed higher after four days of declines, but the rally was largely concentrated in blue chip issues. The Dow Jones industrial average rose 21.02 points to close at 2,963.77 after falling 76 points over the past four sessions.

* The dollar rebounded partly for technical reasons. It finished above 130 yen in New York.

Stocks

Analysts attributed the gains in the Dow index largely to short-term trading games and not any newfound confidence on Wall Street about corporate earnings reports or interest rate trends.

Advancing issues outnumbered declines by about 4 to 3 on the New York Stock Exchange. Big Board volume rose to 170.12 million shares, up from Monday’s 148.53 million.

Wall Street’s slide in recent days was attributed to concerns about third-quarter earnings, which are expected to be disappointing because of the weak economy.

Meanwhile, trader predictions that the Federal Reserve will lower rates again have proven false so far, adding to the unhappy mood in the market.

But Alfred E. Goldman, analyst with brokerage A. G. Edwards & Sons Inc. in St. Louis, discounted the notion that the market was depressed about the economy or interest rates. He called the recent declines “a normal correctional phase of a market that is in a bull phase.”

Goldman called Tuesday’s performance “a very normal, knee-jerk bounce” after four days of losses.

The market’s gains were also propelled by bargain hunters, said First Albany Corp.’s Hugh Johnson. “The market has had crosscurrents, both pleasant surprises and disappointments,” he said.

Among the market highlights:

* International Paper rose 1 5/8 to 70 1/8 after reporting third-quarter earnings of 98 cents a share, above some analysts’ estimates of 91 cents. The news helped erase some of the gloom caused by a disappointing profit report from another Dow industrial stock--Westinghouse--on Monday.

Westinghouse, down 2 5/8 to 19 1/8 Monday, fell further Tuesday, losing 1 1/8 to 18.

* In another disappointment, Procter & Gamble dropped 2 to 81 3/4. The company said profit in the quarter just ended would be slightly below year-ago levels.

* Among other Dow stocks, Disney was up 1 at 113 5/8, Alcoa picked up 1 1/2 to 59 3/4, and Goodyear closed at 43 1/8, up 1 1/4.

* Airlines also posted strong gains, with UAL rising 2 5/8 to 122, Delta picking up 1 to close at 63 3/4 and AMR gaining 1 3/8 to 56 3/8.

* National Medical Enterprises, which sank 4 1/8 Monday on profit concerns, rose 1 1/2 to 17 5/8. Donaldson, Lufkin & Jenrette repeated a buy rating, calling the stock a bargain. Other hospital stocks continued to lose ground, however. Humana fell 1 to 27 3/4, and Critical Care dropped 1 3/4 to 39.

* Sun Microsystems lost 2 3/8 to 24 7/8. Several analysts cut estimates on the company amid concerns about competitive pressures.

* SynOptics Communications fell 2 1/8 to 15 1/2. Oppenheimer cut its earnings estimates after the company said it expects third-quarter income to be 20 to 21 cents a share, which would be below Wall Street’s estimates.

* Telefonos de Mexico jumped 2 3/8 to 41 1/8. Paine Webber repeated a buy rating after the company said it probably will meet analysts’ 1991 estimates of $3.25 to $3.50 a share. The stock gained despite new reports of Mexican phone users’ unhappiness with TelMex’s service. The company maintains that it is investing billions of dollars to upgrade what it admits is still a weak phone network.

Overseas, Tokyo stocks closed lower, with the 225-share Nikkei average falling 175.21 points to 24,155.62.

In Frankfurt, the 30-share DAX average lost 9.95 points to close at 1,578.71.

Shares closed slightly higher in London in thin trading. The Financial Times 100-share average added 3.3 points to finish at 2,599.5.

Credit

The Treasury’s bellwether 30-year bond fell 13/32 point. The yield, which moves inversely from price, rose to 7.83% from 7.79% late Monday.

Shorter-term securities were unchanged to slightly higher.

President Bush announced that he would try to make it easier for small businesses to get bank loans. The effort is aimed at easing tight credit conditions to speed the sluggish economic recovery.

Analysts said traders used the announcement as an excuse to sell bonds after restlessly waiting for the Federal Reserve to lower interest rates.

Participants reasoned that if the Bush initiatives worked and bolstered growth, inflation may rise and erode the value of existing Treasury bonds, particularly long-term issues.

But traders generally remained hopeful that the Fed would ease the federal funds rate, a key short-term rate, by 0.25% from its current target, widely believed to be 5.25%.

The funds rate, the interest on overnight loans between banks, was quoted at 5.125% late Tuesday, down from late Monday’s 5.188%.

Currency

The dollar advanced on world currency markets amid renewed skepticism that U.S. interest rates are headed lower.

Trading was active, with the dollar posting its strongest gains against the Japanese yen, which has rallied during the past week, and the German mark. The dollar returned above the key 130 level against the yen and also broke technical barriers against the mark.

The dollar closed at 130.17 Japanese yen, up from 129.40 and at 1.699 German marks, up from 1.680 marks Monday.

The British pound fell in New York to $1.707 from Monday’s $1.734.

Commodities

The prospect of a diminishing Florida orange crop sent prices of orange juice futures sharply higher on the Cotton Exchange in New York.

On other markets, grain and soybeans declined, livestock were mixed, precious metals were lower, and energy futures advanced.

With Tuesday’s gains, orange juice futures have advanced 6% during the past three trading sessions.

Orange juice futures for delivery in January settled 2.85 cents higher at 131.80 cents a pound.

On the Commodity Exchange in New York, the December gold contract lost $1.80 and settled at $360.20 an ounce; December silver was 6.3 cents lower at $4.085 an ounce.

Light, sweet crude oil for delivery in November settled at $22.99 per barrel, up 1 cent, at the New York Mercantile Exchange.

Market Roundup, D8