Bright Bank Earnings Push Dow Up 6.94 : Market Overview

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

* A late rally in blue chips and earnings gains at key banks brought stocks back from early lows. The Dow Jones industrials rose 6.94 points to 3,343.25. But smaller stocks fell again.

* Gold bounded higher in a performance that left some analysts convinced that the metal has finally bottomed.

Stocks

The Dow had been down throughout most of Tuesday’s session, after a 30-point drop on Monday and persistent weakness in overseas markets.

Analysts could pinpoint no catalyst for stocks’ turnaround with less than an hour to go before the closing bell. But they noted that better-than-expected first-quarter earnings at some key banks gave strength to the market.

Still, while the Dow advanced again, most broader indexes finished marginally lower. Declining issues outnumbered advancers by about 9 to 8 on the New York Stock Exchange, and by 10 to 8 in the NASDAQ market.

Big Board volume totaled 214.46 million shares, up from Monday’s 192.04 million shares.

“The market looks pretty tired,” said Philip Orlando, analyst at Unity Management Inc.

Industrial stocks such as chemicals and autos--which should benefit from the economy’s recover--have been very hot in recent days, “but even some of them are giving up some ground,” Orlando said.

Meanwhile, investors continue to exit in droves many of the consumer-growth stocks that were popular in 1990 and 1991.

Among the market highlights:

* Banking stocks were led by troubled Citicorp, which jumped 1 1/2 to 18 1/4 on a surprising first-quarter profit report. Meanwhile, California giant Wells Fargo leaped 9 7/8 to 76 1/8 after posting earnings well ahead of expectations.

Other banking stocks gaining on earnings optimism included Chemical Banking, up 7/8 to 34 3/4; BankAmerica, up 2 1/2 to 45; NationsBank, up 1 3/8 to 48 5/8, and Chase Manhattan, up 1 1/8 to 24 5/8.

* Some industrial stocks continued to soar, including Cummins Engine, up 4 5/8 to 64 7/8 on a better-than-expected profit report. Other winners included Lubrizol, up 2 1/2 to 64 3/4; Scott Paper, up 2 to 45 3/4, and Dupont, up 1 1/8 to 50 5/8.

But profit taking hit Alcoa, off 1 5/8 to 76 1/8; GE, off 1 to 77 3/4; and Caterpillar, down 1 1/4 to 54 3/4.

* Airlines were notably weak. AMR, parent of American, fell 1 1/2 to 68 1/2; UAL, parent of United, lost 3 to 125, and Delta fell 1 1/4 to 58 3/4. AMR announced a new round of fare cuts, and a major credit rating agency warned it might downgrade seven carriers.

* Gaming stocks were hammered, which analysts attributed mostly to investors’ strong desire to take profits in any growth-stock group that hasn’t yet fallen. Mirage Resorts sank 2 3/4 to 29 7/8 after reporting flat quarterly profits. Caesars World fell 2 1/4 to 35, and Promus lost 2 to 26 1/2. Also, video-lottery terminal maker WMS Industries dropped 3 3/4 to 17 5/8 on its quarterly profit report, which though down was no surprise.

* In the tech group, Storage Technology plummeted 10 7/8 points to 45 3/8 after the data-storage equipment maker reported disappointing first-quarter results. - Among Southland issues, Dole Food jumped 1 3/4 to 34 on news it may sell the public a stake in its real estate unit. Also, Coast Savings rose 5/8 to 11 1/2. Investor Theodore Kruttschnitt said he sold his 6.8% stake in Coast. He had been whittling it down since last year.

Overseas, Tokyo stocks continued to decline in thin trading, ending below 17,000 for the first time since April 9. The Nikkei average closed down 284.03 points at 16,787.33.

In London, stocks finished a quiet session on weaker footing. The Financial Times 100-share average fell 12.8 points to 2,625.8. Frankfurt’s DAX average eased 2.73 points to 1,746.50.

Commodities

Gold for current delivery jumped $4.20 to $341.10 an ounce on New York’s Comex, the biggest one-day gain since Feb. 27. Silver rose 2.8 cents to $3.99.

Analysts said the gold rally began overnight when Middle Eastern speculators who sold gold several weeks ago began buying it back on overseas markets.

“They finally gave up waiting for the worst predictions . . . to come true--that gold will drop to $320,” said one analyst.

Analysts traced gold’s turnaround to the market’s inability in recent days to break below $336.

Meanwhile, May oil futures rose 1 cent to $20.25 a barrel on the New York Merc.

Credit

Bond yields were mostly unchanged in seesaw trading.

The yield on the Treasury’s 30-year issue, which rose sharply Monday, ended flat at 8.02%.

Traders said interest rates remain under pressure by increasing signs of economic recovery. One Wall Street survey on Tuesday showed sales at department stores, discounters and specialty stores up sharply this month, a new signal of economic strength.

The bond market also faces heavy new supplies. The Treasury will sell $14.75 billion of two-year notes today and $10.25 billion of five-year notes on Thursday.

The federal funds rate, the interest on overnight loans between banks, was quoted at 3.625%, down from 3.688% Monday.

Currency

The dollar settled mostly higher in uneventful trading on world currency markets.

In New York, the dollar rose to 1.670 German marks, up from 1.666 Monday. It also settled at 134.25 Japanese yen, unchanged.

Market Roundup, D10