Dow Rises 6.23 as Fears About Oil Prices Ebb : Market Overview

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

* Stocks recovered from Tuesday's slide as traders reappraised the outlook for oil prices. The Dow Jones average rose 6.23 points to 3,370.44. On Tuesday the average fell 22.56.

* Bond prices moved higher after a sharp drop the previous session. The yield on the Treasury's 30-year bond, which moves inversely to the price, slipped to 7.90% from 7.91% Tuesday.

* Oil futures eased, although they managed to hold on to most of the big gains made a day earlier on indications that Saudi Arabia wants higher prices.

Stocks

In the broader market, advancing issues held a narrow edge on declines on the New York Stock Exchange.

Big Board volume came to 182.24 million shares, against 197.70 million Tuesday.

Prices of most stocks tumbled Tuesday on a report that Saudi Arabia, a pivotal force in world energy markets, had shifted its oil strategy to encourage higher prices.

That news was seen initially as an inflationary threat, and a possible new obstacle to the progress of the budding U.S. recovery.

But analysts said investors seemed to be taking a less emphatic view Wednesday.

"The Saudis are against a big gain in oil prices nearly as much as they're opposed to a big fall," said Ray Dalio of Bridgewater Associates in Wilton, Conn. "They know that a spike in oil prices would threaten the fragile global economic expansion, which would hurt demand."

As components of the Dow Jones industrial average, Chevron, Exxon and Texaco limited the average's gain Wednesday after having significantly reduced the size of its loss the day before.

Among market highlights:

* Oil stocks slipped on profit taking. Arco, up 6 1/8 Tuesday, dropped 2 1/2 to 115 1/4. Exxon fell 2 1/4 to 61 3/4, Texaco dropped 2 1/8 to 64 5/8, and Mobil lost 1 5/8 to 65 3/8. Unocal eased 3/4 to 26 7/8 after rising 1 1/2 Tuesday.

Some natural gas producers continued to go higher. Enron rose 3/4 to 42, Transco added 5/8 to 15 1/4, and Williams inched up 1/8 to 30 1/8.

* Many industrial stocks shrugged off worries that higher oil prices would slow the recovery. Auto stocks were particularly strong on news of healthy mid-May sales. GM rose 1 1/8 to 39 1/8, Ford 3/4 to 44 and Chrysler 1/4 to 18.

Among other industrials, Clark Equipment rose 3/4 to 28 3/4, Fluor gained 1 1/4 to 44 1/8, and nickel producer Inco rose 5/8 to 29 7/8.

Also, Litton Industries added 7/8 to 46 1/2 on a 13% rise in quarterly earnings. Other industrials rising on healthy earnings reports included farm machinery maker Varity, up 1 1/8 to 15, and auto-parts maker Magna International, up 7/8 to 27 3/4.

* Syntex, a major drug maker, plunged 3 1/2 to 37 5/8 after reporting disappointing quarterly sales of key drugs. Most other drug stocks were weak, but Amgen gained 1 1/8 to 58 7/8 after the Thousand Oaks-based biotech firm said it sees continued strong sales of its infection-fighting drug Neupogen.

* Among Southland issues, Azusa-based Optical Radiation tumbled 1 3/8 to 18 7/8. The optical-products company reported sharply lower quarterly earnings and said its plan to spin off its consumer optical group is still awaiting a favorable IRS tax ruling. The deal will close later than the planned July 31 date, the firm said.

* L.A.-based Whittaker, a parts maker for commercial aircraft, rose 7/8 to 13 1/2 after brokerage Oppenheimer & Co. added the stock to its recommended list.

* Jenny Craig, the Del Mar-based diet-center chain, rose 1 7/8 to 20 1/8 on a favorable Wall Street Journal story.

But after the market closed, the company said current-quarter operating earnings should be slightly below year-ago results. The firm also said it is postponing a secondary stock offering planned by certain shareholders.

Overseas, stocks closed lower in Tokyo, Frankfurt and London. Tokyo's 225-share Nikkei average lost 382.08 points or 2.10% to 17,822.56.

Shares slipped for the second day in a row in Frankfurt, the 30-share DAX index shedding 12.61 points to 1,794.05. Stocks ended weaker in London on worries about the pace of recovery in Britain. The Financial Times 100-share average fell 6 points to 2,698.6.

Credit

Economists said bond trading was light in the absence of significant economic news. Traders ignored a government report that durable goods orders rose 1.4% in April.

The price of the 30-year bond, which fell 1 3/32 points Tuesday, rebounded 3/16 point, or $1.88 per $1,000 in face amount.

The rise in long-term bonds largely was a reaction to the big decline Tuesday, which was prompted by strong reports on consumer confidence and auto sales. Those reports dampened prospects for lower interest rates.

The federal funds rate, the interest on overnight loans between banks, was 3.875%, down from 4% Tuesday.

Currency

The dollar rose broadly in active trading on currency markets.

The dollar firmed in technical trading overseas and continued to advance when activity shifted to domestic markets. The government's durable goods report propelled the dollar higher.

The dollar had been pressured lower by expectations that the Federal Reserve would trim interest rates to stimulate the economic recovery. Lower interest rates make dollar-denominated securities less valuable to investors, thereby decreasing their need for the U.S. currency.

In New York, it settled at 1.638 German marks and 130.20 Japanese yen, up from 1.612 marks and 129.45 yen Tuesday.

Commodities

In commodities trading, corn and soybean futures ended moderately higher, wheat futures rose, oat futures fell, precious metals were mixed, and livestock and meat futures rose.

Light, sweet crude oil for delivery in July settled at $21.92 per barrel, down 8 cents, on the New York Mercantile Exchange.

In the previous session, oil shot up more than $1 per barrel amid an apparent policy reversal by Saudi Arabia, OPEC's biggest member. There were indications that the Saudis wanted higher prices.

The Saudis have traditionally favored moderate petroleum prices, for fear high prices would encourage consuming nations to seek alternative energy sources.

But they are now apparently ready to see prices go up by as much as $3 per barrel this summer, if the Organization of Petroleum Exporting Countries can stick to its agreement to hold output fairly steady at the same time demand increases for the peak driving season.

Meanwhile, gold and silver futures edged lower on New York's Commodity Exchange. June gold fell 20 cents to $338.20 an ounce. May silver fell 0.5 cent to $4.082.

Market Roundup, D6

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