Blue Chips Slip; Broader Market Gains : Market Overview
* Blue chip stocks fell modestly, but the market was once again underpinned by strength in tech issues and other smaller stocks.
* Short-term interest rates jumped after government inflation and retail sales reports indicated the economy is gaining strength.
Stocks
Reports on October consumer prices, consumer sentiment and retail sales all portrayed firmer economic growth, but had little overt impact on stocks.
Rumors that Russian President Boris N. Yeltsin had ordered a state of emergency or had been deposed in a coup briefly afflicted trading in the morning. The speculation was denied by a Russian government spokesman.
Analysts said many investors were concentrating on individual stocks rather than the macroeconomic picture. “We’re really much more in a market of individual stocks,” said Tom Callahan, analyst at Yamaichi International. “People are searching for good ideas.”
By the close, the Dow Jones industrial average had lost 6.76 points to 3,233.03, finishing the week with a net loss of 7.03 points. New York Stock Exchange volume was 192.95 million shares, down from 226.01 million Thursday.
But the NASDAQ composite index of smaller stocks gained 2.79 points to 637.16 Friday, continuing its recent surge. And on both the NASDAQ market and New York Stock Exchange, winning stocks continued to outpace losers, despite the Dow’s loss.
Among the market highlights:
* Technology stocks moving higher included Intel, up 3/4 to 70; FileNet, up 1 to 20 3/4; Marshall Industries, up 5/8 to 40 5/8; Triconex, up 3/4 to 14 1/2, and Archive Corp., up 5/8 to 10 1/4.
* Biotech shares also rallied anew, helping push the NASDAQ market up. Amgen rose 1 to 73 5/8, Immunex leaped 1 3/4 to 54 1/4, Gensia gained 1 to 28 3/4, and Genzyme added 1 1/8 to 44 5/8. Also, Chiron jumped 2 3/8 to 58 1/8, and Cambridge Neuroscience gained 2 1/2 to 10 1/2.
Elsewhere in the health care sector, hospital giant Humana plunged 4 to 19 7/8. The company, which is planning to split into two separate entities, said it will stop paying a dividend after the regular payout set for Feb. 1.
* Investors’ hunger for smaller stocks was evident in the big moves of such NASDAQ names as Dreyer’s Grand Ice Cream, up 1 to 23 1/2; hair-cutting chain SuperCuts, up 3/4 to 13 1/4; coffee-roaster Starbucks, up 1 1/4 to 32, and Veterinary Centers of America, up 1/2 to 4.
* Another big NASDAQ gainer was Tele-Communications, which jumped 1 1/4 to 19 1/8. Several analysts repeated buy ratings and raised estimates after a surprisingly robust third quarter for the cable TV operator.
* Among NASDAQ losers, Holson Burnes sank 5 1/2 to 6 3/4. The photo album maker warned that its 1992 profit would be well under analysts’ expectations.
* Breed Technologies made a splashy debut, going public at 17 on the NYSE and closing at 20. The company makes sensors used in the process of inflating automobile air bags during accidents.
* In the farm-equipment sector, Deere dropped 1 5/8 to 40 1/4, and Tenneco lost 1 to 34 1/2. Analysts said industry results for October were disappointing.
Stocks were mixed in overseas trading. Share prices fell on the London stock exchange. By the closing bell, the Financial Times 100-share average had fallen 28.9 points, or 1.1%, to 2,697.5.
Shares ended a bullish week in Frankfurt with another 0.9% rise. The 30-share DAX average ended 13.15 points higher at 1,548.52.
Tokyo’s Nikkei average lost 46.14 points to 16,330.79.
Credit
A report that consumer prices gained 0.4% in October sparked a sharp rise in short-term interest rates, while longer-term rates eased slightly.
The yield on one-year Treasury bills surged to 3.68% from 3.57% Thursday. But the yield on 30-year T-bonds slipped to 7.57% from 7.58% Thursday.
Traders said short-term Treasury yields fell victim to both the inflation report and the Commerce Department’s strong October retail sales report. In suggesting a stronger economy, the reports raised fears that the Federal Reserve could raise short-term interest rates sooner than later.
However, some traders dismissed the consumer price number as little more than a statistical blip.
The federal funds rate, the interest on overnight loans between banks, fell to 2.81% from 3% Thursday.
Currency
The dollar failed to rally despite the favorable economic reports and lower interest rates abroad.
In New York, the dollar fell to 1.573 German marks from 1.580 Thursday. It inched up just to 124.05 Japanese yen from 123.95.
Commodities
Coffee futures prices surged to a seven-month high on New York’s Coffee, Sugar & Cocoa Exchange as worries about tightening supplies from South America intensified.
Coffee for December rose 1.95 cents to 69.20 cents a pound, the highest settlement of a near-term coffee contract since April 9.
Elsewhere, crude oil ended 13 cents lower at $20.08 a barrel on the New York Merc, extending a long-term slide associated with rising production and the sluggish global economy.
Gold rose $2.10 to $335.30 an ounce on New York’s Comex. Silver fell 2.8 cents to $3.75 an ounce.
