Disney Helps Dow Rise 2.23 to Record Close : Market Overview

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

* Investor interest in two hot stocks pushed blue chips to their 12th record close of the year. But the broader market finished mixed in moderate trading, as many investors took to the sidelines.

* Bond yields rose, though in extremely light trading.

Stocks

The Dow Jones industrial average added 2.23 points to 3,282.42, surpassing the previous record of 3,280.64 last Thursday.

But the Dow’s gain was largely because of two stocks: Drug giant Merck, up 3 1/4 to 149 1/2, and Disney, up 1 1/2 to 154 3/8. Because those are the two highest-priced stocks in the Dow, their moves affect the index much more than the other 28 stocks in the index.

While the Dow fluctuated in a narrow range, the broader market spent the day under constant pressure from rising bond yields.

Declining issues outnumbered advances by 10 to 7 on the New York Stock Exchange, as volume plunged to 177.47 million shares from Friday’s 259.54 million.

The NYSE composite index rose 0.16 point to 227.62, but the NASDAQ composite index of smaller stocks dropped 4.82 points to 624.93, hurt by another selloff in biotech shares.

Among the market highlights:

* Airline and railroad stocks were hit by a wave of profit taking, sending the Dow transports index down 15.14 points to 1,451.79. UAL, parent of United Airlines, sank 1 3/4 to 153 1/2. Also, Burlington Northern fell 1 1/8 to 43 5/8, Conrail dropped 1 1/2 to 82 5/8, and Delta Airlines gave up 1 5/8 to 70 1/4.

* Home builders’ stocks, also hot recently, were slammed by worries about rising mortgage rates. Centex dropped 2 to 50 1/2, Lennar sank 1 5/8 to 50 1/4, and Kaufman & Broad slid 1/2 to 21.

* Biotech stocks, which have led many growth stocks lower this year after huge gains in 1991, dropped anew. Gensia lost 3 3/4 to 43 1/4, Immunex fell 2 1/2 to 51, Agouron dropped 1 1/8 to 13 5/8, and Genzyme sank 1 5/8 to 44 1/4.

* On the plus side, computer maker Digital Equipment rose 3 1/4 to 65 1/2. Donaldson, Lufkin & Jenrette repeated a buy rating on the stock.

But IBM lost 1/2 to 89 3/8. Soundview analyst Stephen Cohen cut his 1992 earnings estimates on the firm to $6.50 a share from $7, citing strong competition in the mainframe computer market.

* Many industrial stocks that could benefit from an economic recovery continued to rise. Engine maker Briggs & Stratton added 1 5/8 to 52 3/8, Kennametal was up 1/2 to 32 1/8, steel firm Nucor jumped 4 7/8 to 98 1/2, and truck-parts maker Eaton rose 3/4 to 72 3/8.

* Among retailers, Home Depot traded as high as 63 3/4 after releasing better-than-expected quarterly earnings, but the stock fell back to close up just 1/8 at 61 3/4.

Meanwhile, supermarket chain Vons gained 7/8 to 27 1/4 despite reporting flat operating profits in its latest quarter, and Nordstrom rose 1 1/4 to 40 after reporting weak quarterly results. Investors apparently expected worse from both retailers.

* BankAmerica was up 1/2 to 42 5/8, nearing its 52-week high of 44 3/4. Some investors apparently were responding to renewed expectations of major cost savings when BofA buys Security Pacific. Those expectations were raised again when a BankAmerica official, testifying at a Senate hearing in Washington, used the figure of 10,000 expected job cuts after the merger is completed.

However, BofA later said the official cited the 10,000-jobs figure only as something discussed in the media. The bank itself won’t say how many jobs it expects to cut.

Overseas, London’s Financial Times 100-share average finished up 17.4 points at 2,559.7, while Frankfurt’s DAX average gained 11.47 points to 1,729.10.

In Tokyo, the Nikkei average lost 318.57 points to 20,973.24.

Credit

Bond trading essentially came to a standstill in the absence of economic news, traders said.

The price of the Treasury’s key 30-year bond, off 7/16 point Friday, fell 9/32 point, or $2.81 per $1,000. That sent the yield up to 7.97% from 7.94% Friday.

Traders are awaiting two big Treasury bond sales this week: The government will sell $14.25 billion of two-year notes today and $15.75 billion in five-year notes on Wednesday. Many bond analysts say the market is suffering from too much supply, which means yields must rise to entice new buyers into the market.

The federal funds rate, the rate on overnight loans between banks, was 3.98%, up from 3.75% Friday.

Currency

The dollar settled mixed on world currency markets in light, uneventful trading.

“It appeared as if there was virtually no business taking place,” said Richard Levine, trader at Merrill Lynch Futures.

In New York, the dollar fell to 1.653 German marks from 1.659 Friday. It rose to 129.20 Japanese yen from 128.95.

Commodities

Weak prices plus meat packers’ decision to slaughter fewer animals sent live cattle futures prices lower on the Chicago Merc.

Elsewhere, light, sweet crude oil for April delivery fell 23 cents to $18.43 a barrel on the New York Mercantile Exchange.

On New York’s Commodity Exchange, gold was $1.40 lower at $349.80 an ounce. March silver was 0.5 cent lower at $4.09.

Market Roundup, D12