Dow Adds 13; Bonds Hit by Suspect Trades : Market Overview

Highlights of Thursday’s market activity

* Stocks closed mixed, as declines in some key consumer and financial stocks were offset by gains in industrial and transportation issues. Smaller stocks continued to show a strong trend upward.

* Bond yields edged higher after Wednesday’s small rally, as new statistics suggested a better economy. Meanwhile, bond futures were whipsawed by what traders called possibly improper transactions in the Chicago futures pits.

* Oil prices tumbled to their lowest levels since late August on concerns over Iraqi oil coming back to market.

Stocks

Stocks continued to be driven by renewed hopes for a healthier economy in 1993. Many traders, now assuming that Democrat Bill Clinton will be elected President, are placing bets on stocks that would gain from Clinton’s expected push to revitalize the economy.

The Dow Jones industrial average added 13.78 points to 3,200.88, driven by such economy-sensitive names as Goodyear, up 1 5/8 to 65 3/4; 3M Co., up 1 1/2 to 101 1/4, and Alcoa, up 3/4 to 68 5/8.

Also, the Dow transportation average gained 7.45 points to 1,313.43 as rail and trucking stocks rose. The transport index has jumped from 1,215 just two weeks ago.

“When you get this kind of leadership in transports, it means there’s a potential turn in the economy that people are looking for,” said Gene Jay Seagle, analyst at Gruntal & Co.

Still, declining issues beat winners on the New York Stock Exchange 965 to 789, as volume totaled 216.4 million shares, off from 219.1 million Wednesday.

But in the NASDAQ market of smaller stocks, winners topped losers 963 to 923, even though the NASDAQ composite index slipped 0.03 point to 597.12. NASDAQ stocks have sharply outpaced blue chips in recent weeks.

Analysts said the Dow industrials’ close above the key resistance level of 3,200 was significant, and could foretell a breakout.

Yet experts cautioned that the market is being very selective in producing big winners. For example, several major financial stocks tumbled Thursday on worrisome earnings reports.

Among the market highlights:

* Industrial stocks were led higher by GM, which shot up 1 7/8 to 32 7/8 on rising expectations that the company will be restructured.

Other big gainers among industrial issues included Cummins Engine, up 2 to 65 1/2; Eaton, up 1 1/2 to 78 1/4; Ingersoll-Rand, up 1 to 32 1/4; steel maker Nucor, up 2 1/2 to 56 5/8, and USX-U.S. Steel, up 3/4 to 25 1/4.

* Rising transport issues included Alaska Airlines, up 7/8 to 16 3/8; CSX, up 1 3/8 to 61; Roadway, up 2 3/4 to 64 1/4, and Conrail, up 5/8 to 40 1/8.

* Key financial stocks were slammed. BankAmerica dropped 2 1/4 to 41 3/4 and was the most active NYSE issue after releasing quarterly earnings. Wall Street shrugged off efforts by company officials to calm fears over what some analysts considered a deterioration in the balance sheet.

Also, brokerage Salomon plummeted 4 1/4 to 33 3/4 after reporting a quarterly loss, stunning analysts who had expected a big profit.

* Some consumer stocks continued to come under pressure on concerns about future profit growth. Philip Morris lost 1 3/8 to 77 1/4, Pfizer sank 1 1/8 to 74 1/4, Syntex slid 7/8 to 24 1/8, and Hershey Foods gave up 1 7/8 to 45.

* Pacific Telesis dropped 1 7/8 to 40 1/8 as 3.39 million shares changed hands--nine times average daily volume--as rumors swept Wall Street that the company’s directors will vote this weekend against a proposal to spin off its Pacific Bell operations into a separate firm.

PacTel called the rumor unfounded and noted that Chairman Sam Ginn has said a decision on the proposed split might not be made until the end of the year.

* Many small NASDAQ technology stocks continued to rally, but Adaptec was a glaring exception, tumbling 7 3/8 to 23 1/8. The maker of computer-data flow devices said quarterly earnings would likely be flat with the second quarter.

* Among other NASDAQ issues, Southland-based International Cablecasting added 1/8 to 5 5/8 after Canada’s Shaw Cablesystems said it raised its stake in the cable programming services firm to 5.8%, buying 515,500 shares recently. The two companies formed a partnership earlier this year.

Overseas, Frankfurt shares staged a technical recovery, with the DAX average ending 6.2 points higher at 1,510.11. London’s Financial Times 100-share average added 12.4 points to 2,658.1.

But stocks ended weaker in Tokyo, with the Nikkei average dropping 128.48 points to 17,013.04.

Credit

Interest rates were mostly higher in a turbulent bond market session influenced by some highly questionable trades in the Chicago futures market.

Yields rose early in the day after the Labor Department reported that the number of Americans filing new claims for jobless benefits fell to 368,000 in early October, the lowest in more than two years.

The 15,000 decline during the week ended Oct. 10 was the third straight drop. The news suggested a strengthening economy, which could push interest rates up.

The yield on the Treasury’s key 30-year bond ended at 7.61%, up from 7.60% Wednesday. Shorter-term yields posted slightly greater gains. The market was also whipsawed by odd transactions in the Chicago futures pits that prompted an unusual intervention by the Chicago Board of Trade.

Traders said someone who may not have had proper trading credentials made a series of very large trades in Treasury bond futures that sent bond prices sharply lower early in the day. The transactions, rumored to be as many as 60,000 contracts, caused bond prices to plunge about a point, pushing yields up.

Traders said the Board of Trade intervened, escorting an unidentified person off the floor and unwinding all of his trades. The Board of Trade’s action helped bonds recover later in the day, pulling yields back down.

The Board of Trade said its investigators were “on top of the situation from the very beginning.” The board notified the U.S. attorney’s office and the Commodity Futures Trading Commission, which regulates futures trading, about possible violations of market rules and federal law.

Currency

The dollar fell against most major currencies after receiving a short-lived boost on news of the drop in the number of new claims for jobless benefits.

In New York, the dollar settled at 120.73 Japanese yen, down from 122.60 Wednesday. The dollar also dropped to 1.508 German marks from 1.520.

Commodities

Energy futures continued to slide on the New York Merc, with December light, sweet crude oil off 26 cents to $21.35 a barrel amid a rumor that the United Nations might allow Iraq to resume selling its crude soon.

Although U.N. officials later denied the rumor, crude didn’t recover. Many analysts have said recently that oil is overvalued.

Elsewhere, frozen orange juice futures prices tumbled on reports producers are having trouble finding buyers for fresh Florida oranges. Juice for delivery in November settled 4.30 cents lower at 97.80 cents per pound.

On New York’s Comex, December gold was $1.00 lower at $343.10 an ounce, and December silver dipped 1 cent to $3.80.

Dow Jones Industrials

Oct. 22, 1992 High: 3,221.14 Close: 3,200.88 Low: 3,162.79

Dow Jones Industrials

Oct. 22, 1992 216.40 million shares