Dow Up 12.74 for 3rd Straight Record High
* A late rally in blue chips drove the Dow Jones industrial average to its third consecutive record close. The index jumped 12.74 points to 3,366.50. But most other major stock indexes closed lower.
* Heavy-industry stocks once again shone, while drug stocks plunged for a second day.
* Oil soared on worries of a possible confrontation between Libya and the West that could prompt a price hike. Bond yields also rose on renewed inflation worries.
Stocks
The Dow average ended the week with a 111.13-point gain. The market will be closed today in observance of Good Friday.
Despite the gain in blue chips, declining issues topped advancing ones 9 to 8 on the New York Stock Exchange, and 11 to 7 in the NASDAQ market. Profit-taking chipped away at many issues.
The Standard & Poor’s 500 index lost 0.23 point to 416.05, and the NASDAQ composite sank 8.22 points to 591.81, dragged down by another biotech selloff.
On the Big Board, volume came to 232.84 million shares, up from 228.38 million Wednesday.
Stocks seesawed in a narrow range for most of the session. A rally in the final half-hour, attributed to the expiration of stock-index futures and options, pushed the Dow to its high for the day.
Another batch of favorable first-quarter corporate earnings reports continued to support the market, a weeklong trend. Texas Instruments weighed in with a good report, and its stock rose 1 to 36 1/4.
“Almost all earnings have been better than expected, and that’s been a positive,” said Alfred E. Goldman, analyst at A. G. Edwards & Sons in St. Louis. “Market participants are beginning to realize the economy has bottomed.”
Indeed, government data on Thursday showed a larger-than-expected decline in the number of Americans filing first-time unemployment claims earlier this month. And February’s trade deficit improved dramatically.
Still, many analysts are predicting a major selloff soon, arguing that the market has come too far, too fast. “This is still a very limited rally--limited essentially to very, very high-quality blue chip stocks,” said Hugh Johnson, analyst at First Albany Corp.
Others disagreed with fears that the Dow’s solo act is troublesome, arguing that the blue chips will eventually lead the rest of the market higher.
Among the highlights:
* Industrial stocks, which get a boost from an expanding economy, continued to perform well. Alcoa added 2 to 76 5/8, TRW leaped 3 3/8 to 54 1/8, Fluor gained 2 1/8 to 43 5/8, PPG Industries climbed 2 3/8 to 62 5/8, and bearings maker Timken was up 1 3/8 to 29 3/8.
* Auto stocks did well amid indications that first-quarter earnings may be better than projected. GM led the Big Board’s active list, rising 2 3/8 to 42 1/4. Ford, which is expected to post a small profit, added 1 to 41 7/8.
* TV networks rose further on expectations of a rise in advertising with the economic recovery. CBS rose 2 1/4 to 187 3/4, and Cap Cities/ABC leaped 12 1/4 to 468.
* Electric and gas utility stocks showed strength, though there was no news. Houston Industries added 1/2 to 43 5/8, SCEcorp was up 3/4 to 42 5/8, and Peoples Energy gained 1/2 to 26.
* The big losers for a second consecutive day were drug and biotech stocks. Many investors appear to be abandoning these stocks in favor of industrial issues tied to the economy.
Also, though many drug companies have reported higher first-quarter profits, revenues are flattening and gains from foreign operations have been limited by a weak dollar.
Bristol-Myers Squibb, which reported that earnings jumped 13%, fell 2 to 75 1/2. Pfizer was off 3 3/8 to 69 3/4, Syntex lost 2 1/4 to 44 1/4, and Merck fell 2 3/8 to 148 7/8.
The biotech group continued to suffer from news Wednesday that Centocor’s key drug may not get government approval soon. Centocor lost 2 1/2 to 16 Thursday after falling 12 3/4 Wednesday. Other losers Thursday included Amgen, down 2 3/8 to 57; Gensia, off 2 3/4 to 33 1/4, and Synergen, down 3 to 35 1/2.
* In another sign that investors are abandoning old favorite consumer stocks, Philip Morris lost 7/8 to 78 despite reporting quarterly earnings up nearly 20%.
* In the new-issues market, mortgage banker First Mortgage of Diamond Bar came public at $6 a share and closed at that price on the NASDAQ market. The company had expected to sell shares between $7 and $9, but the market for new small stocks has cooled markedly in recent weeks.
Overseas, the battered Nikkei average in Tokyo couldn’t sustain a rally and ended up just 11.75 points higher at 17,959.76.
In London, the Financial Times-100 index cooled, losing 1.6 points to 2,638.6. In Frankfurt, the DAX average rose 5.44 points to 1,749.23.
Credit
Treasury bond yields rose sharply in light trading, as new government data suggested sustained economic strength.
The 30-year bond fell 5/8 point, or $6.25 per $1,000. Its yield, which rises when the price falls, rose to 7.93% from 7.87% Wednesday.
Analysts said the market responded to reports that initial claims for unemployment insurance fell in early April, and that oil prices rose. A combination of a fast-recovering economy and higher energy prices could fuel inflation, bonds’ biggest enemy.
Economists said many traders sold bonds to cut inventories and guard against sudden developments over the holiday weekend.
The fed funds rate, the rate on overnight loans between banks, was 3.81%, down from 4%.
Commodities
Oil prices surged in a rally attributed to fears of a possible confrontation between Libya and the West. Technical trading games also weighed on the market.
On the New York Mercantile Exchange, light, sweet crude for May delivery jumped to $20.21 a barrel, up 34 cents for the day but down 23 cents for the week.
On Thursday, Libya began expelling diplomats whose countries back the U.N.’s recent sanctions against Libya for alleged terrorist activities.
Elsewhere, gold for current delivery rose $1.40 an ounce to $337.40 on the New York Comex. Silver closed at $3.97, down 3.9 cents, continuing its recent selloff.
Currency
The dollar rose against most major currencies on the better-than-expected jobless figures and trade data, suggesting a strengthening economy.
In New York, the dollar rose to 133.95 Japanese yen from 133.38 Wednesday. It also rose to 1.669 German marks, up from 1.663.
Dealers said trading was sluggish ahead of Good Friday. Currency markets will be open in the United States but closed in Europe today and Monday, which is expected to curb dealings here.
The positive U.S. economic data dampened potential profit-taking in the dollar ahead of the long weekend, said Mike Faust, a currency dealer with MMS International.
