Dow Surges on Wave of Rosy Reports : Market Overview

* Blue chips surged in their third straight gain as government economic figures gave investors new confidence in the recovery.

* The Dow Jones average rose 25.94 points to close at 3,359.12, within about seven points of its record set April 16.

* Prices of U.S. government securities finished higher as traders brushed off economic news and focused on a sharp increase in the money supply and other concerns.

Stocks

Traders started Thursday’s session in a bullish mood after Wednesday’s 25-point rise by the Dow. They were further encouraged by the latest government economic reports.

At the close, advancing issues outnumbered decliners on the New York Stock Exchange by more than 2 to 1.

Big Board volume totaled 223.59 million shares, against 206.78 million traded Wednesday.

Traders looked at the latest economic news, which pointed to a slow climb out of the recession, and determined that “maybe the best of all worlds is a mediocre world--a slow, sluggish recovery,” said Jack Solomon, who follows stocks for Bear, Stearns & Co.

“A lot of companies have gotten lean and mean, and they don’t need a fat-cat type of recovery because they’ve fired people and closed plants,” Solomon said.

“We are seeing some more focus,” said Eugene Peroni, chief technical analyst at Janney Montgomery Scott.

“These blue chips are continuing to attract a lot of interest. We look for the Dow to work a bit higher and investors to get a little more bullish.”

The index of leading economic indicators, the government’s chief economic forecasting gauge, edged up 0.2% in March, signaling slow but continued growth for later this year.

The Labor Department said the number of Americans filing first-time claims for unemployment benefits was unchanged during the third week in April, the fourth straight week without an increase.

The Commerce Department said orders to U.S. factories jumped a better-than-expected 1.6% in March. Further signs of strength in manufacturing came from purchasing managers in the Midwest.

The stronger bond market also added fuel to the rally.

Market highlights included:

* Chrysler fell 3/8 to 19 1/4 after announcing that it lost $13 million in the first quarter. Ford Motor, which announced a first-quarter profit on Wednesday, was down 3/8 at 45 3/8.

* IBM was up 2 5/8 at 90 3/4, and Time Warner was up 1 5/8 at 106 on news that they were working on a joint venture that would combine IBM’s technological expertise with Time Warner’s cable television system.

One trader said the rioting in Los Angeles as a result of the acquittal of four white policemen in the beating of a black motorist may have contributed to weakness in some insurance stocks.

* General Re plunged 7 3/8 to 81 after weak first-quarter results. Elsewhere in the group, Chubb lost 1 5/8 to 64 5/8, CNA Financial fell 5/8 to 87 1/2, and Capital Holding eased 1 1/8 to 52 5/8.

* DuPont was up 1 5/8 at 54 1/4 on surprisingly good earnings.

Oil stocks were on the rise, as crude oil prices soared to their highest level of the year.

* Amoco was up 7/8 at 48 1/2, Arco rose 2 3/4 to 111 1/2, Chevron was up 1 1/4 at 69 3/4, Exxon was up 3/4 at 60, Mobil was up 3/4 at 64 5/8, Occidental Petroleum was up 7/8 at 20 3/4, Pennzoil rose 1 5/8 to 48 3/8, and Texaco was up 1 3/4 at 62 1/4.

The NASDAQ index of over-the-counter issues, which has lagged far behind the blue chip Dow in this year’s rally, jumped 8.74 points, or 1.5%, to close at 578.68.

Stocks closed mixed in overseas trading.

Shares closed down in London, with the Financial Times 100-share average ending 10.8 points lower at 2,654.1.

In Frankfurt, the 30-share DAX average ended 1.88 points lower at 1,734.03. Stocks also closed weaker after a lackluster session in Tokyo. The 225-share Nikkei average, which was closed Wednesday for a holiday, finished the day down 136.69 points at 17,390.71.

Credit

The price of the Treasury’s 30-year bond rose 11/32 point, or $3.44 per $1,000 in face amount. Its yield dropped to 8.03% from 8.06% Wednesday.

The bond market moved lower after the release of the index of leading economic indicators and the weekly unemployment claims report.

Those appeared to be positive signs, which generally move bond prices down. But on closer view, traders began buying as the index of leading economic indicators was weaker than expected and the unemployment numbers occurred during a four-day week, indicating they likely would be higher the following week.

The market paid scant attention to the favorable factory orders report.

Steven R. Ricchiuto, economist at Barclays de Zoete Wedd Securities Inc., said the market moved higher as traders bought bonds to avoid a price run-up if Argentina begins buying large amounts of securities under a debt restructuring pact.

The U.S. government has allowed Argentina and other Latin American countries to restructure their debt through the use of a type of long-term Treasury bond.

Later, the market received a boost when the government reported a sharp drop in a measure of the nation’s money supply. The weakening in M2--which includes cash, checking and savings deposits, money market mutual funds and non-bank traveler’s checks--indicates a decline in deposits.

Jacqueline Sullivan, an analyst with Ramirez Capital Consultants Inc., said the Federal Reserve is watching money supply closely, and the decline leaves open the door for further interest rate reductions.

The Fed would lower rates to stimulate the economy, which statistics indicate is in a slow recovery. Bond prices move higher on lower rates.

The federal funds rate, the interest on overnight loans between banks, was quoted at 3.813%, up from 3% late Wednesday.

Currency

The dollar fell marginally in quiet dealings, with traders ignoring the economic news that otherwise might have benefited the currency.

John McCarthy, chief currency dealer for Algemene Bank Nederland in New York, said some of the dollar’s decline was because of traders selling the currency to take profits. He also said technical factors played a role.

In addition, some traders trimmed their holdings in the face of a three-day May Day holiday in Europe that starts Friday.

In New York, the dollar weakened to 133.25 Japanese yen from 133.50 late Wednesday, while the dollar fell to 1.648 German marks, down from 1.658 marks.

The British pound rose to $1.778, more expensive than $1.773 the day before.

Commodities

An attempted rally in wheat futures prices failed as an improved crop outlook and a lack of news about Russian food aid deflated market optimism.

Wheat and corn futures ended mostly lower, while oats and soybeans advanced. On other commodity markets, most energy and precious-metal futures advanced; livestock and meat futures ended mixed.

Wheat for May delivery ended 1.25 cents higher at $3.723 a bushel after trading as high as $3.77. Most deferred wheat deliveries ended below Wednesday’s levels.

May corn fell 0.50 cent to $2.44 a bushel; May oats rose 2.50 cents to $1.365 a bushel; May soybeans rose 2 cents to $5.743 a bushel.

Meanwhile, in energy trading on the New York Mercantile Exchange, light, sweet crude oil for June delivery rose 8 cents to $20.85 a barrel.

Gold for June delivery rose $1.50 to $337.60 an ounce on New York’s Commodity Exchange, and May silver rose 3.3 cents to $3.988 an ounce.

Market Roundup, D8