Dow Shrugs Off Tokyo’s Loss, Ends Up 13.86 : Market Overview

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

* Stocks closed mixed, as blue chip issues largely ignored the Tokyo market’s latest plunge. The Dow Jones industrial average closed up 13.86 points to 3,249.33 after trading lower for most of the day. Smaller stocks were weak.

* Interest rates fell across the board, as bond traders saw continuing weakness in one otherwise upbeat economic report. The yield on the Treasury’s bellwether 30-year bond sank to 7.89% from 7.95% Tuesday.

* The dollar rose sharply, helped by a “flight to safety” by worried foreign investors spooked by Tokyo.

Stocks

While Tokyo’s problems reverberated in most European markets, U.S. stocks emerged unscathed. Traders said U.S. investors continued to focus almost exclusively on the economic outlook.

In an encouraging sign, the National Assn. of Purchasing Management said its key economic index rose to 54.1% in March from 52.4% a month earlier. The report is a barometer of the manufacturing sector, and any figure above 50% means industry is expanding.

Some stocks sensitive to the economy’s swings seemed to get a boost from the NAPM news. But traders noted that the market overall seemed hesitant.

Despite the Dow’s gain, declining issues outnumbered advancers by about 10 to 7 on the New York Stock Exchange. Volume totaled 186.42 million shares, up from 182.74 million Tuesday.

On the corporate front, there was one other encouraging report: The number of companies raising dividend payments in March totaled 98, up from 91 a year ago, Standard & Poor’s said. That continues an uptrend in dividend increases that began last fall.

Among the market highlights:

* Industrial stocks that gained on economic hopes included Boeing, up 1 3/8 to 45 1/4; Goodyear, up 1 1/2 to 66 3/4; copper producer Phelps Dodge, up 2 to 84 1/2, and Ford Motor, up 3/4 to 39 1/8.

But many industrial stocks closed marginally lower despite the NAPM report. Hurting sentiment: Chemical giant W.R. Grace tumbled 3 1/4 to 37 1/2 after saying first-quarter earnings are likely to be down versus a year ago.

* Retailers, which would gain from a sustained economic recovery, were mostly higher. Sears jumped 1 1/8 to 46, J.C. Penney gained 1 1/2 to 65 3/4, and Nordstrom added 1/2 to 37 1/2.

But in the deep-discount arena, Fifty-Off Stores plunged 2 3/8 to 22 1/8 after the firm reported annual earnings of 63 cents a share for 1991, apparently a few cents below what Wall Street expected. Another deep-discounter, Value Merchants, sank 1 1/8 to 20 1/8.

* Drug stocks, which were down sharply in the first quarter, rallied on the first day of the second quarter. Bristol-Myers Squibb gained 1 3/8 to 77 5/8 after the shares were pummeled on Tuesday over earnings-growth concerns.

Other winners included Merck, up 2 1/2 to 149 5/8; Pfizer, up 1 3/4 to 71 1/4, and Lilly, up 1 1/2 to 72 1/2.

Biotech firms, however, were mostly lower. Centocor dropped 1 1/2 to 27 5/8, Amgen slipped 1/4 to 62 1/4, and Immunex fell 1 3/4 to 42.

* Discount brokerage Charles Schwab tumbled 2 3/8 to 32 1/4. There was no news, but the stock was trading near all-time highs of late.

* Among Southland issues, cosmetics firm Neutrogena gained 1 3/4 to 20 on the NASDAQ market. Prudential Securities analyst Andrew Shore upgraded the stock to buy from hold.

Elsewhere, Santa Monica-based hospital giant National Medical Enterprises sank 1/4 to 13 1/8 after trading at a 52-week low of 12 7/8.

Overseas, Tokyo’s troubles cut into most other foreign markets. In London, the Financial Times 100-share average plunged 31.5 points, or 1.3%, to 2,408.6. In Frankfurt, the DAX average fell 10.56 points to 1,707.30. In Paris, the CAC 40 index lost 14.36 points to 1,928.07.

Credit

Bond yields rose initially after the upbeat NAPM report. But that brought a herd of buyers into the market, said Steven R. Ricchiuto, economist at Barclays de Zoete Wedd Securities.

In addition, he said, some traders decided that upon closer inspection the NAPM survey wasn’t all that positive for the economy. It showed that manufacturers continued to lay off workers, that export orders slowed and that inventories didn’t grow.

Bond yields jumped sharply in the first quarter on expectations that an economic recovery would automatically lead to higher interest rates. But in recent weeks yields have edged lower as more investors have reconsidered the strength of the recovery.

The federal funds rate, the interest on overnight loans between banks, was quoted at 7.00%, up from 4.25% late Monday. The rate often fluctuates wildly on Wednesdays, which are settlement dates on which banks must report their reserves to federal authorities.

Currency

The dollar rose against major currencies, mostly in reaction to the Tokyo stock market’s drop.

In New York, the dollar jumped to 134.50 Japanese yen from Tuesday’s 132.85 yen. The dollar also rose to 1.652 German marks, up from 1.645 Tuesday.

The dollar often wins by default when troubles in foreign markets cause a “flight to safety” among global investors.

Commodities

Grain and soybean prices fell sharply after a Soviet aid package and a government crop report yielded no bullish surprises.

Wheat for delivery in May fell 9.75 cents to settle at $3.693 a bushel; May corn dropped 4.25 cents to $2.60 a bushel.

Meanwhile, light, sweet crude oil for May rose 40 cents to $19.84 a barrel on the New York Mercantile Exchange after Libya threatened to withhold exports of crude oil to protest U.N. sanctions.

On New York’s Comex, April gold fell 80 cents to $342.90 an ounce, and May silver fell 4 cents to $4.10.

Market Roundup, D8