Dow Up 19.68, Buoyed by Oil Firm Stocks : Market Overview

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

* Blue chips closed higher after gathering support from a continuing surge in oil stocks and from bargain hunting.

The Dow Jones industrials rose 19.68 points to 3,245.08, rebounding from Friday’s tumble of 30 points.

* Bond yields were mostly higher as investors were disappointed that the Federal Reserve took no steps to lower interest rates.

Stocks

Though the Dow rallied, smaller stocks fell back. The NASDAQ composite index dropped 0.82 point to 634.13, reflecting weakness in biotechnology shares.

Still, on the New York Stock Exchange advancing issues outnumbered declines by 5 to 3 on moderate trading volume of 188.03 million shares, against 231.04 million Friday. Mondays have been slow of late.

“The secondary stocks have been running ahead of the Dow,” said analyst Alice Sadlo at McDonald & Co. “They’re just losing some of their fluff.”

Traders noted that the NASDAQ was wounded by a sag in biotech issues, which came after a negative article about the stocks in Barron’s magazine.

Among market highlights:

* Oil stocks continued to rise on optimism about possible OPEC production cutbacks that could shore up the price of oil. Oppenheimer & Lehman Bros. recommended Mobil, which shot up 1 3/4 to 65, and Arco, which gained 1 to 105 7/8.

Other oil and oil-services winners included Halliburton, up 1 1/8 to 28 3/8; Chevron, up 1 1/8 to 65 3/4, and Schlumberger, up 1 1/2 to 60.

* In the biotech sector, MGI Pharmaceutical tumbled 11 5/8 to 10 3/4. It suspended clinical trials of its chemotherapy toxicity treatment.

Elsewhere in the group, the Barron’s article helped promote a selloff. Amgen fell 1 5/8 to 66 1/4, Centocor lost 1 3/4 to 49 1/4, Synergen dropped 3 1/4 to 54 1/4, Immune Response was down 3 1/4 to 31 3/4, and Immunex slumped 1 7/8 to 57 3/8.

* Housing-related stocks rose further on hopes for a rebound in construction and new home sales. Among builders, Kaufman & Broad added 1 3/8 to 23 3/4, Centex gained 1 1/8 to 51 3/4, and Standard Pacific added 1/2 to 13 1/4.

Also, Shaw Industries gained 4 1/8 to 44, and Salem Carpet rose 2 3/16 to 7 11/16. Shaw agreed to buy Salem in a $65-million takeover.

* Many industrial issues also were strong, as investors continued to bet on a recovery--with or without lower interest rates. Caterpillar jumped 2 3/8 to 49 7/8, Phelps Dodge gained 3 to 76 1/2, Clark Equipment rose 1 to 26 3/4, and Reynolds Metals added 1 to 54 3/4.

* The Dow index was helped by a sharp rise in Disney, up 4 1/8 to 143 3/4. The stock hit a 52-week high of 144 1/4 during the trading.

* Pacific Enterprises slid 7/8 to 17 1/2, a 52-week low, in the wake of the troubled firm’s move last week to sell major businesses and suspend its dividend.

* Boeing dropped 1 3/8 to 48. UAL, parent of United Airlines, will delay purchases of some jets to cut costs. UAL slipped 7/8 to 144 1/4.

Overseas, shares declined in thin trading on the Tokyo exchange. The Nikkei average fell 287.60 points, or 1.3%, to 21,819.52.

In London, stocks finished with firm gains despite a shaky start. The Financial Times 100-share average rose 21.2 points to 2,538.4.

The Frankfurt exchange was relatively quiet. The DAX average slipped 3.39 points to 1,682.13.

In Mexico City, the Bolsa index jumped 30.31 points to a record 1,677.38 on strong buying of TelMex, the nation’s phone company. In NYSE trading, TelMex jumped 2 1/4 to 53 3/4, a new high.

Credit

The bond market waited again for signs that the Federal Reserve would ease credit further, but the Fed apparently didn’t budge.

The federal funds rate, the overnight loan rate among banks, was 3.88%, unchanged from Friday. If the Fed wanted to ease credit, it could have influenced that rate by adding cash to the financial system.

The lack of Fed action caused some nervous traders to sell long-term bonds. The Treasury’s 30-year bond fell 3/8 point, or $3.75 per $1,000. Its yield inched up to 7.79% from 7.76% Friday.

Bond traders have been hoping for Fed action since Friday, when the Labor Department said the nation lost 91,000 jobs in January, another sign that the economy continues to weaken.

Supply concerns also weighed on traders. The Treasury is selling $36 billion in new notes and bonds this week, starting today with the sale of three-year notes.

Meanwhile, the Moody’s bond-rating service downgraded California’s general obligation bonds to Aa-1, a drop from the top rating of Aaa. Moody’s cited the state’s budget problems. The rating cut had been expected.

Currency

The dollar rose, strengthened by political uncertainty in Japan, economic problems in Germany and the failure of the Fed to ease interest rates in the United States.

Traders said the dollar drew some early vitality from Japan, where the governing Liberal Democratic Party over the weekend lost a local election that raised more clouds over Prime Minister Kiichi Miyazawa’s administration.

In New York, the dollar was at 1.577 German marks, up from 1.560 Friday. It rose to 126.70 Japanese yen from Friday’s 125.30.

Commodities

Cattle futures prices jumped after the government surprised traders with a lower-than-expected count of the U.S. cattle herd.

Meanwhile, gasoline futures fell, heating oil rose and crude oil futures ended mixed on the New York Merc, with light, sweet crude for March delivery falling 9 cents to $19.78 a barrel.

On New York’s Comex, February gold rose 90 cents to $355.90 an ounce, and February silver rose 0.8 cent to $4.19.

Market Roundup, D14