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Smaller Stocks Surge Again; Dow Sheds 3.36

Market Overview

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

* Blue chip stocks closed lower in trading slowed by the Veterans Day holiday. But smaller issues again galloped to new highs.

The Dow Jones industrial average slipped 3.36 points to 3,042.26.

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* Oil prices plunged, though not apparently on any news.

Stocks

The market was led higher by familiar winners: Biotech, brokerage and some defense stocks.

On the New York Stock Exchange, advancing issues outnumbered losers by about 9 to 8. Big Board volume fell to 129.06 million shares from 183.34 million Friday.

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Though the Dow index meandered and closed lifeless, small stocks continued to soar. The NASDAQ composite index of over-the-counter stocks rose 2.63 points to 550.71, a third straight record.

“The NASDAQ averages continue to set a blistering pace,” said Alan Ackerman, analyst at Reich & Co. “It appears investors are looking to put money (in) for a quick bounce, and they’re finding it in the OTC market while blue chips struggle just under record highs.”

David Holt, analyst at Wedbush Morgan Securities in Los Angeles, noted that the average NASDAQ stock has jumped 47% year to date. By contrast, the average NYSE stock has gained 20%.

But he also warned, “Historically, when you’ve rotated from the quality into the secondary and speculative stocks, that is a sign of a mature uptrend.”

Among the market highlights:

* Biotech stocks continued to soar, in what many analysts now depict as a dangerous speculative frenzy. Immune Response rocketed 3 1/4 to 60 3/4, Biogen rose 1 1/2 to 45 3/4, and Immunex leaped 4 1/2 to 57 3/4.

Centocor added 4 1/2 to 49 1/2 after Kidder Peabody repeated a buy rating because of what it said was promising data related to the firm’s CentoRex anti-clotting drug.

Meanwhile, condom-maker Carter Wallace gained 2 3/8 to 110 3/8, bolstered by expectations of higher sales after the revelation last week of Magic Johnson’s HIV infection. He has begun to campaign for safe sex practices.

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* Brokerage stocks jumped again. Merrill Lynch rose 3/4 to 56 1/8, Morgan Stanley added 7/8 to 60 1/4, and Legg Mason gained 1 1/8 to 22 1/2.

* On the downside, GM lost 1 3/8 to 32 5/8 in reaction to the auto maker’s comments that it faces up to $24 billion in pension liabilities. Elsewhere, Ford dropped 1 to 25 1/8, and Chrysler eased 1/4 to 12 3/4.

* Defense issues moving higher included General Dynamics, up 1 to 52 1/2, and Raytheon, up 1 1/2 to 79 1/2.

* Del Mar-based diet-center chain Jenny Craig soared 3 5/8 to 30 1/2. The company reported quarterly earnings up 76%.

* Among smaller Southland stocks, those hitting new 1991 highs included magnetics-technology firm Aura Systems, up 7/8 to 9; computer products firm Rainbow Technologies, up 3/4 to 19 3/4, and lamp-maker Dynasty Classics, up 3/4 to 9.

* Dreyer’s Grand Ice Cream leaped 3 1/8 to 28 3/8 after the Oakland-based company announced a new sugar-free ice cream.

* Players International sank 7/16 to 2 3/16. The Calabasas company reported a large quarterly loss because of accounting changes.

* Another big loser was L.A.-based S&L; CalFed, which slumped 1/2 to an all-time low of 1 7/8. Investors apparently fear that loan losses will erase the company’s net worth, though it remains solvent.

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Overseas, stocks fell sharply on the lowest volume this year on the Tokyo Stock Exchange. The 225-share Nikkei average fell 253.50 points to 24,232.99.

In Frankfurt, shares succumbed to a late round of profit taking to end slightly higher. The DAX average added 2.80 points to 1,609.02.

Shares fell slightly on London’s Stock Exchange. The Financial Times 100-share average closed off 4.1 points at 2,554.9.

Credit

The U.S. Treasury bond market was closed for the Veterans Day holiday.

In the tax-exempt market, the Bond Buyer index of 40 actively traded municipal bonds closed Monday at 95 5/16, unchanged from Friday. The average yield to maturity also held steady at 6.81%.

Currency

The dollar settled lower in light trading on world markets.

U.S. banks were closed for the Veterans Day holiday, although many managed to keep currency trading operations open.

The dollar opened higher in Europe, but traders decided to test the downside in the absence of market-moving news and succeeded in pushing the U.S. currency lower. Analysts said the dollar ran into strong support at 1.644 German marks.

“That is a very important number,” said Richard Levine, trader at Merrill Lynch & Co. “It is in between the dollar’s high and low for the year, and it’s going to be very hard to get momentum going one way or another” without some fundamental development.

In New York, the dollar ended at 1.640 German marks, down from 1.649 at Friday’s close, and at 130.05 Japanese yen, down from Friday’s 130.43 yen.

The British pound rose in New York to $1.771, versus $1.763.

Commodities

Energy futures prices tumbled in trading largely dominated by technical factors.

The December contract for light, sweet crude oil fell 43 cents to $22.58 a 42-gallon barrel on the New York Mercantile Exchange.

Analysts said there were no news developments to affect trading. They said prices apparently were easing as worries lessened about recently tight energy supplies.

The December contract for home heating oil lost 2 cents to 67.57 cents a gallon, while wholesale unleaded gasoline for December delivery skidded 2.30 cents to 62.59 cents a gallon.

Elsewhere, soybeans for delivery in November fell 7.75 cents to $5.463 a bushel in thin Veterans Day trading on the Chicago Board of Trade. December wheat dropped 3.50 cents to $3.475 a bushel; December corn fell 2 cents to $2.43 a bushel; December oats slipped 1.50 cents to $1.28 a bushel.

Meanwhile, precious metals advanced, paced by January platinum’s $2.50 gain to $360.50 an ounce on the New York Mercantile Exchange on news that miner strikes had closed three platinum mines in South Africa.

On New York’s Commodity Exchange, December gold rose $1 to $356.20 an ounce; December silver rose 0.7 cent to $4.01 an ounce.

Market Roundup, D12


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