Dow Edges Up 1.56, but Losers Top Gainers 5-3

Market Overview

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

* Blue chip stocks closed marginally higher, capping a turbulent day with a modest gain after six consecutive sessions of losses. But in the broader market, declining issues swamped advancers.

The Dow Jones industrials edged up 1.56 to 2,865.38.

* Oil prices rebounded slightly after Monday’s big drop.

Stocks

The market was much weaker than the Dow’s small rise would suggest, indicating that bears remain in control.

Analysts said technical buying pushed the market back above the key support level of 2,850 on the Dow after it slipped to 2,839.

“When it came down to 2,850, it shook the apples from the tree,” MKI Securities manager Dick Stein said. “You’re getting portfolio realignment and bargain hunting.”

Still, losers outnumbered gainers by 5 to 3 on the New York Stock Exchange and by 10 to 7 on the NASDAQ market. Big Board volume rose to 207.53 million shares, against Tuesday’s 192.92 million.

Computerized program traders generated most of Wednesday’s activity, with individual investors sidelined because of continued concern about the economy. Analysts said investors are awaiting today’s reports on November retail sales and wholesale prices.

Among the market highlights:

* IBM continued to rebound from Monday’s plunge. It rose 1 1/2 to 87 3/4. But another ailing blue chip, GM, slid 5/8 to 27 7/8 after saying it will retrench further. Among other Dow index losers, Goodyear lost 1 3/4 to 46 1/4, apparently on concerns about the weak auto industry.

* There was bad news from other industrial giants. Heavy machinery firm Caterpillar eased just 3/8 to 39 after cutting its quarterly dividend to 15 cents a share from 30 cents. The market had expected the move.

But another machinery maker, Deere, tumbled 2 1/8 to 40 7/8 after plunging 4 1/4 Tuesday on a bleak near-term business forecast.

* Nucor, a steel firm, fell 1 7/8 to 74. Brokerage Morgan Stanley downgraded its rating on the firm.

* Also reflecting worries about a new recession, railroad stocks continued to lose ground. CSX fell 7/8 to 48 3/4, Norfolk Southern lost 1 3/4 to 55, and Union Pacific slid 1 1/4 to 44 3/8.

* TRW soared 2 7/8 to 40 after the defense firm set a major restructuring. Another big mover was defense giant General Dynamics, up 2 1/4 to 53. There was no news.

* Buyers also flocked to select medical products makers, including Ballard Medical, up 4 to 37 3/4, and Stryker, up 3 to 45 3/4.

* Trading in Bruno, a grocery store chain, was halted on NASDAQ pending news. After the close, the company said five of its officers, including its chairman, were killed in an plane crash. The stock last traded off 3/8 at 12 1/2.

* Telefonos de Mexico, the Mexican phone company, slumped 2 1/8 to 39 1/8 in sympathy with a selloff in the Mexican stock market. The company denied rumors that it may cut its rates. Also plunging were stock funds that specialize in Mexican issues, including Mexico Fund, down 1 1/2 to 19 3/8, and Emerging Mexico Fund, down 1 1/8 to 16 7/8.

* Among Southland firms, House of Fabrics plummeted 3 3/4 to 22 7/8 one day after disclosing that same-store sales so far in December are flat but that it expects sales to rise in the balance of the month.

Also, workers’ comp insurance firm CII Financial stabilized, up 3/8 to 6 5/8, after sliding 2 3/8 Tuesday. The firm said it must boost reserves by $20 million to cover increased losses in California.

Overseas, Tokyo stocks plunged on futures-linked selling, but the Nikkei average pulled above its 1991 closing low on a late rebound. The Nikkei closed down 450.16 points, or 2.1%, at 21,502.90.

Share prices also finished lower in London. The Financial Times 100-share average fell 11.8 points to 2,378.2.

In Frankfurt, the DAX lost 7.52 points to 1,543.59.

Credit

With no economic reports and little other news to affect the market, government bond prices closed mixed in quiet trading.

The price of the benchmark 30-year bond fell 5/32 point, or $1.56 per $1,000. Its yield inched up to 7.80% from 7.79% Tuesday.

But yields on shorter-term bonds finished slightly lower.

The federal funds rate, the interest on overnight loans between banks, remained at 4.25%.

Currency

The dollar fell from gains in overnight trading that followed uncertainty about the Soviet Union’s future and sharp losses on the Tokyo stock market.

In New York, the dollar closed at 1.577 German marks, down from Tuesday’s 1.579. But it rose to 129.35 Japanese yen from 128.75.

Commodities

Skidding oil prices reversed course after an OPEC member said the petroleum cartel may cut production next spring and rumors circulated that leaders of three Soviet republics might be arrested.

Oil prices swung wildly on the New York Merc, finishing higher after rebounding from a nine-month low reached in the morning.

Light, sweet crude oil for January delivery rose 10 cents to $19.51 per barrel. The price had plunged 62 cents Monday, then lost another penny Tuesday.

But natural gas futures continue to fall, dropping 7.9 cents to $1.851 per 1,000 cubic feet.

Meanwhile, on New York’s Comex, December gold fell $2.30 to $366.60 an ounce; December silver lost 6.8 cents to $3.91.

Market Roundup, D8