Dow Slips 0.27 but Still Ends Week With a Gain : Market Overview

* Stocks posted mixed results, but overall the market showed resilience in the face of a second consecutive day of selling pressure on prominent blue chips.

* Treasury bond yields rose again, on growing fears that Bill Clinton would dramatically boost spending to energize the sluggish economy if he is elected President.

Stocks

The Dow Jones industrials slipped 0.27 point to 3,174.41, closing out the week with a net gain of 37.83 points.

Advancing issues topped losers by about 7 to 6 on the New York Stock Exchange, where volume jumped to 235.92 million shares from 213.59 million Thursday.

Trading was boosted in the early going and again just before the close by last-minute transactions related to the monthly expirations of options and futures on stock indexes and individual stocks.

Brokers said a wary mood was set by government reports showing persistent weakness in the economy. Still, investors seemed eager to reward the stock of any company posting better than expected third-quarter earnings--while also kicking any that disappoint.

Among the market highlights:

* Within the Dow, Philip Morris fell 2 1/2 to 77 1/4, and IBM slumped 2 1/8 to 70 3/4, extending their sharp declines Thursday on earnings disappointments.

Philip Morris, which cited consumers’ preference for cheaper cigarette brands in reporting slightly lower than expected third-quarter profit, had dropped 4 1/4 Thursday. IBM, whose quarterly profit came in far below estimates, had fallen 5 1/8 Thursday.

For the week IBM fell 7 3/4, or 9.9%, and Morris 4 1/2, or 5.5%.

* Westinghouse, another component of the Dow, dropped 1 1/2 to 11 3/4. The company said rumors regarding its financial condition were unfounded.

The speculation seemed to have been touched off by Westinghouse’s recent announcement that it was setting aside a $155-million reserve for its credit subsidiary.

* GM was also hit again, off 1 1/8 to 29 3/8. The company rebutted rumors that it might actually file bankruptcy. It said it expects to report a third-quarter loss in line with analysts’ estimates.

* Among the day’s winning Dow stocks were Alcoa, up 1 3/4 to 66, and International Paper, up 1 7/8 to 63 3/8, as investors apparently decided the recent fall in those and some other industrial issues were overdone.

* Also on the plus side, retailers rose on new hopes for stronger consumer spending. Circuit City rose 2 to 37 1/2, Nordstrom jumped 2 1/4 to 33 1/4, Dillard rose 1 7/8 to 40 3/8, and Penney gained 1 7/8 to 72 3/4.

* Outside of IBM, many tech shares were winners. Apple jumped 3 1/2 to 49 after reporting a 20% earnings gain. Video-conferencing firm PictureTel rose 2 1/4 to 18 on improved operating earnings.

* Among other gainers, John Nuveen rose 1 3/4 to 26 3/4. The municipal-bond underwriter posted quarterly earnings of 46 cents a share, up from 39 cents a year ago.

In addition, as Merrill Lynch & Co. observed in a current report: “The municipal (bond) market may do somewhat better under a Clinton Administration than under another Bush Administration.

“Gov. Clinton is proposing a tax hike on higher-income people, an action that would raise the appeal of the tax-free income from municipals.”

Overseas, London stocks closed firmer on news of a 1-percentage point cut in British interest rates. The Financial Times 100-share average gained 17.3 points to close at 2,563.9.

In Frankfurt, the DAX average climbed 8.18 points to 1,461.61.

Prices ended lower on the Tokyo stock exchange, with the Nikkei average ending down 258.68 points to 17,369.81.

In Mexico City, the Bolsa index surged 36.87 points to 1,491.66, led by shares of Telmex. U.S.-traded Telmex shares gained 1 7/8 to 47 1/4.

Credit

Bonds were hurt early in the day by a Los Angeles Times story saying Democratic presidential candidate Bill Clinton was considering an accelerated economic recovery plan, urging more spending and expanded tax cuts.

That triggered new bond market worries about inflation and higher federal budget deficits. “Obviously the fiscal stimulus fears are a key concern,” said Jeremy Gluck, vice president at Mitsubishi Bank Ltd.

But yields eased back as trading wore on. At the close, the Treasury’s 30-year bond was off 3/16 point, or $1.88 per $1,000. Its yield was 7.52%, up from 7.51% on Thursday.

Clinton confirmed The Times story at campaign stops Friday, but also said he does not want to increase the deficit further.

Bonds were also helped by a government report showing that a sharp decline in exports led to the nation’s worst trade imbalance in August in nearly two years. A separate report showed industrial production slipped for the third time in four months.

The anemic signs suggested that the Federal Reserve might move soon to lower interest rates again, which would help the value of bonds.

“The negative economic figures limited damage to the bond market,” said Susan Haring, a government bond economist with Salomon Bros.

The federal funds rate, the interest on overnight loans between banks, fell to 2.875% from 3.375% late Thursday.

Currency

The dollar advanced against most major currencies after the Bank of England cut key lending rates, but reaction was muted because the cut had been expected.

The move sent the British pound lower. In New York, the British pound fell to $1.650, down from Thursday’s $1.695.

Traders said the pound’s fall set off a chain reaction that eventually supported the dollar. Traders selling the pound put their money into yen, and then also sold German marks for yen, on news of Japan’s surging trade surplus.

The dollar finished in New York at 119.50 yen, down from 120.25 Thursday, though it rose to 1.480 German marks from 1.453.

Commodities

Wheat futures slumped on the Chicago Board of Trade, extending their decline from a four-month high after some hotly anticipated export sales failed to materialize.

Wheat for December fell 3.5 cents to $3.53 a bushel, adding to Thursday’s 2.75-cent loss.

Meanwhile, corn futures dropped to a new four-year low as harvest pressure reasserted itself.

Elsewhere, precious metal futures ended a four-day slide on New York’s Comex, with October gold rising $1.40 to $342.40 an ounce, and December silver gaining 2 cents to $3.72.

Oil futures retreated on the New York Merc in pre-weekend profit taking. Light, sweet crude for November delivery fell 5 cents to $22.28 a barrel.