Perot’s Withdrawal Sends Dow Up 16.21 : Market Overview

* Ross Perot’s withdrawal from the presidential race spawned moderate gains on Wall Street, but overriding concerns about the economy and earnings tempered the market’s enthusiasm. The Dow Jones industrial average climbed 16.21 points to 3,361.63.

* Treasury bond prices closed mixed in heavy trading in a market torn between conflicting political and economic forces.

Stocks

Analysts said word that Perot had decided against pursuing his third-party bid removed a big uncertainty from the political picture.

“The elimination of Perot means that the election will not go to the House of Representatives, which would have favored Bill Clinton,” said Tracy Herrick at Jefferies & Co. “The stock market likes incumbent Presidents who win.”

Volume on the New York Stock Exchange was 206.9 million shares, down from 208.31 million Wednesday. Advancing issues slightly outnumbered declines.

Individual stocks and industry groups followed widely divergent courses as earnings reports for the second quarter were released.

Analysts said the uneven results reflected the economy’s struggle to mount a sustained recovery.

In a day of mixed economic news, the Labor Department reported that initial claims for state unemployment benefits fell 15,000 in the week ended July 4, suggesting more strength in the job market than analysts had figured on.

Separately, the Commerce Department said housing starts fell 3.2% in June.

Among the market highlights:

* Mexican stocks, which had suffered in recent weeks from worries that Perot opposed a North American trade agreement, soared 3.01% after the Texas billionaire’s announcement. Trading was the heaviest in almost a month.

Telefonos de Mexico led the active list, up 1 1/2 at 49 5/8. Among closed-end investment companies, Mexico Fund climbed 2 3/8 to 25 7/8; Mexico Equity & Income Fund rose 1 to 15 5/8, and Emerging Mexico Fund added 2 1/2 to 20 1/8.

* American Telephone & Telegraph rose 3/4 to 44 7/8, touching a two-year high. The company posted higher operating earnings for the second quarter.

* International Business Machines gained 1 to 100 1/4, breaking 100 for the first time since last fall. It is due to report its midyear earnings today.

* Time Warner, which declared a 4-for-1 stock split and an increase in the cash dividend, added 1 3/8 to 116 1/4. The company also reported narrowed losses for the second quarter and first half.

* Centocor, one of the volume leaders in the NASDAQ market, jumped 1 3/4 to 16 1/4. The company said it formed an alliance with Eli Lilly & Co. through which Centocor is to get as much as $125 million. Lilly shares gained 3/4 to 66 1/2.

* Lockheed rose 1/2 to 44 7/8 as second-quarter profit reached $1.24 a share, up from $1.11 in the like period of 1991.

* Hasbro, traded on the American Stock Exchange, gained 2 1/8 to 29 1/2. The manufacturer of toys and games posted second-quarter earnings of 26 cents a share, against a loss for the corresponding period last year.

* Bank stocks were a weak spot. Chemical Banking fell 1 1/4 to 35 5/8, Citicorp 1/2 to 19 3/4, Bank of Boston 1/4 to 22 3/4, Chase Manhattan 3/4 to 26 1/8 and J. P. Morgan 5/8 to 59 5/8.

In foreign trading, Mexico’s market rallied amid the heaviest volume in recent weeks on the Perot news. Preliminary closing data showed the Mexico Stock Exchange IPC share index rose 49.17 points to 1688.93, or up 3%. Frankfurt’s 30-share DAX average edged up 5.91 points to 1,740.53. London’s 100-share Financial Times average dipped 3 points to 2,483.4. Tokyo’s 225-share Nikkei average slipped 129.26 points to 16,987.66.

Credit

The price of the Treasury’s bellwether 30-year bond gained 5/32 point, or $1.56 per $1,000 in face amount. Its yield, which moves in the opposite direction from price, was 7.61%, down from 7.62% Wednesday.

Three key events drove the market: Perot’s departure from the presidential campaign, the decision of Germany’s central bank to boost a key interest rate and mixed reports on U.S. jobless claims and housing activity.

The federal funds rate, the interest on overnight loans between banks, fell to 3.25% from 3.38% Wednesday.

Currency

The dollar dropped against most currencies after the Bundesbank’s move and Perot’s withdrawal.

Stephen Flanagan, a vice president at Mitsubishi Bank Ltd. in New York, said that because the market had anticipated Germany’s move for a week, there was no significant movement in the dollar.

It fell in New York to 1.478 marks from 1.481 Wednesday. But it rose to 125.35 Japanese yen from 125.10.

Commodities

Signs that political unrest in South Africa could subside prompted platinum futures to plunge on New York’s Mercantile Exchange. Gold and silver futures also fell as traders decided that the weakness in the platinum market might suggest that the time was right to take profits.

On other markets, grain and soybeans were lower, livestock and meat futures were higher, frozen orange juice fell, copper futures gained and energy futures were mixed.

Platinum futures plunged more than $8 before rebounding a little to settle $6.30 lower at $383.50 an ounce. August gold settled $1.50 lower at $353.20 an ounce on New York’s Commodity Exchange. July silver was off 3.2 cents at $3.908 an ounce.

Energy futures were mixed on the New York Mercantile Exchange, with August light, sweet crude oil rising 8 cents to $21.79 per barrel.