Stocks’ Climb Foiled by Weak Biotech Issues : Market Overview

* Treasury bond yields fell sharply as government data revealed further weakness in the economy and slowing inflation.

* Stocks closed lower, pausing for breath in their recent surge.

Stocks

Stocks got off to a strong start after the Labor Department reported a small rise of 0.1% in October consumer prices--the smallest increase in seven months. That allayed fears about inflation.

But in the end, the Dow Jones industrial average slipped 1.79 points to 3,063.51, and most other indexes also eased.

Losers held a narrow edge on gainers in the overall tally at the New York Stock Exchange, 833 to 791. Big Board volume totaled 200.04 million shares, up from 184.48 million Wednesday.

The government also reported Thursday that retail sales--a driving force behind the economy--fell 0.1% in October, showing that consumers were still unwilling to spend freely.

Investors have virtually ignored weak economic reports, figuring that the economy is certain to recover in 1992. But the plunge in biotech stocks this week has forced some investors to realize the danger in being overly optimistic.

Philip Orlando, portfolio manager at Unity Management Inc., said: “The market’s realized over the past couple of days that a lot of these (biotechnology) companies are built up on fumes.”

Among the market highlights:

* Biotech stocks continued to be pummeled. Immune Response lost 5 to 41 after plummeting 15 3/4 Wednesday on concerns that its AIDS vaccine wouldn’t be approved by the FDA as quickly as previously expected.

Elsewhere in the group, Synergen also extended its losses, losing 2 5/8 to 57 1/4. It said earlier this week that it would stop trials of the drug Trofak. Other biotech losers included California Biotech, down 2 1/2 to 21; Immunex, down 2 to 54 3/4, and Amgen, off 1 3/8 to 57 1/2.

* Another health care loser was hospital firm Humana, plunging 4 to 23 3/8. Analysts cut ratings and estimates on the firm after it forecast a disappointing quarter.

* While biotech and hospital stocks fell, investors continued to pour into other health care stocks, including drug giant Merck, up 2 1/8 to 144 5/8; medical equipment firm Sunrise Medical, up 2 to 35, and health care center operator ReadiCare, up 1 to 6 3/4.

* Shares of credit card marketing and servicing companies plummeted after the Senate voted to approve a cap on credit card interest rates. MBNA dropped 5 to 31 3/4, and Advanta Corp. slumped 8 to 30 1/2. Many bank stocks also fell, including Citicorp, off 1/2 to 11, and First Chicago, down 1 to 26.

* Among industrial issues, Caterpillar fell 3 1/8 to 44 7/8 after it forecast a fourth-quarter loss larger than its $86-million loss for the first nine months. Engineering firm Fluor slumped 3 1/4 to 38 5/8, though there was no news from the firm.

* On the plus side, insurance and airline stocks were particularly strong. Among insurers, CNA jumped 3 to 99, Cigna rose 2 3/8 to 58 3/4, and Mercury General rose 1/2 to 33. Among airlines, UAL added 2 3/8 to 134 1/4, and Southwest Air jumped 2 to 29 1/4.

Overseas, stocks closed lower in Tokyo, shrugging off a long-expected cut in the official discount rate. The Nikkei average closed off 239.69 points at 24,176.54.

London stocks closed moderately higher after retreating from bigger gains. The Financial Times 100-share average climbed 15.1 to 2,561.6. A wave of profit taking sent Frankfurt shares lower. The 30-share DAX average eased 2.27 points to 1,620.96.

Credit

Bond yields were down convincingly on the weak October inflation report.

The price of the Treasury’s bellwether 30-year bond gained 17/32 point, or $5.31 per $1,000. Its yield fell to 7.81% from 7.86% late Wednesday.

The small rise in consumer prices eased market concerns about inflation. The consumer price report followed a more unsettling report on October wholesale inflation, which had caused bond yields to rise on Wednesday.

Many investors continue to believe that the Federal Reserve will lower interest rates further in coming months; Thursday’s inflation report bolstered that sentiment.

Currency

The new evidence of economic weakness pushed the dollar lower against other major currencies.

The dollar fell against the German mark, dropping to 1.630 marks in New York from 1.635 late Wednesday. It also fell to 129.62 Japanese yen from Wednesday’s 130.10.

Commodities

Prices of platinum futures fell on the New York Mercantile Exchange, erasing most of their recent gains after a major refiner said new platinum supplies would exceed consumption by 210,000 ounces this year.

Platinum for delivery in January fell $4.20 to $361.20 an ounce.

On New York’s Commodity Exchange, December gold deliveries fell $1.60 to $355.70 an ounce; December silver dropped 6.8 cents to $3.98 an ounce.

Meanwhile, crude oil futures rose on the New York Mercantile Exchange, breaking an eight-day losing streak. Light, sweet crude oil for December delivery rose 17 cents to $22.52 a barrel.