Market Bucks a Weeklong Slump : Market Overview

The stock market pulled out of a weeklong slump as the battered shares of International Business Machines showed signs of stabilizing. Airline stocks also rallied in a busy session.

* Bond yields retreated after rising earlier in the day on fresh evidence that the economy is recovering.

Stocks

IBM stock, which tumbled 11 points Tuesday and Wednesday to its lowest levels since 1981, recovered 1 1/8 to 53 Thursday.

The shares were rocked by Tuesday’s news of new cost-cutting and write-offs at the company, along with the acknowledgment that the dividend might not be safe at current levels.

The Dow Jones average of 30 industrials, down 68.63 points over the last five trading days, rebounded 14.05 points to 3,269.23.

Advancing issues outnumbered declines by more than 5 to 3 on the New York Stock Exchange. Big Board volume came to an estimated 241.64 million shares, against 244.04 million in the previous session.

Otherwise, analysts said, stocks continued to get support from signs that economic recovery is gathering momentum as the year draws to a close.

The Labor Department reported that initial claims for state unemployment insurance rose 22,000 in the week ended Dec. 5. But analysts said the trend in the jobless claims numbers remained encouragingly downward.

Commerce Department data showed record exports in October, narrowing the nation’s merchandise trade deficit to $7.03 billion.

Also, a survey by the Federal Reserve Bank of Philadelphia pointed to a strong pickup in the pace of manufacturing growth.

Among the market highlights:

* Heading a strong airline group was Delta Air Lines, up 2 7/8 at 51 3/4 as the company announced a series of cost-cutting measures, including reductions in pay and capital spending as well as a proposed lowering of the quarterly dividend from 30 cents a share to 5 cents a share.

* Among other airline stocks, UAL gained 3 3/8 to 120; AMR 1 3/4 to 62 3/8, and Southwest Airlines 2 1/4 to 28 3/8.

* Intel, traded in the NASDAQ market, climbed 3 to 86 1/2 on top of a 6 1/8-point jump Wednesday, when the company said its fourth-quarter earnings would be “well above” Wall Street estimates.

* Elsewhere in NASDAQ technology issues, Novell rose 1 1/8 to 27 1/2; Apple Computer 1 7/8 to 56 7/8; Cisco Systems 2 7/8 to 72 3/8, and Seagate Technology 1/2 to 19 1/4.

* Storage Technology fell 1 to 20 3/4 in Big Board activity. Late Wednesday the company estimated lower than expected results for the fourth quarter.

* Blue chips joining IBM in bolstering the Dow included American Telephone & Telegraph, up 7/8 to 49; Philip Morris, up 5/8 to 76 7/8; J.P. Morgan, up 1/2 to 63 1/8; Coca-Cola, up 7/8 to 41 1/2, and Exxon, up 7/8 to 62.

* Horizon Healthcare rose 1 1/8 to 13 1/2. Earnings for the fiscal second quarter ended Nov. 30 came to 16 cents a share, up from 10 cents a share in the corresponding period a year earlier.

Overseas, the Tokyo stock exchange closed firmer with the 225-share Nikkei average up 169.20 to 17,437.91. Stocks also closed higher in London, with the Financial Times 100-share average ending the day 7.5 points up at 2,740.3. On the Frankfurt bourse, shares closed mixed with the 30-share DAX average closing 4.10 points higher at 1,476.17.

Credit

The yield on the Treasury’s main 30-year bond was 7.42%, down from 7.43% late Wednesday. Its price, which rises when yields decline, was up 1/8 point, or $1.25 per $1,000 in face amount.

The market “gets knocked down occasionally as it did today, but going down seems to bring forward some buying,” observed William Griggs, managing director at Griggs & Santow Inc. “The market has been so thin that it doesn’t take much buying to muscle it around a little bit.”

Normally, news of a burgeoning economy would send bond prices lower, on the premise that it would heat up inflation and erode the value of long-term investments. But after sifting through the numbers and concluding that there was little to worry about, bargain hunters moved in during the afternoon and pushed prices higher.

The federal funds rate--the interest on overnight loans between banks--was 2.938%, unchanged from late Wednesday.

Commodities

Oil futures extended strong gains on the New York Mercantile Exchange on news that Venezuela will cut its crude oil production by an unspecified amount.

The news followed word on Wednesday that Nigeria will cut crude production by 10%.

Light, sweet crude oil for January delivery rose 29 cents to $19.70 a barrel; January heating oil rose 0.76 cent to 56.26 cents a gallon.

Elsewhere, gold rose 50 cents to $338.40 an ounce on New York’s Commodity Exchange. Silver rose 4.3 cents to $3.773 an ounce.

Currency

The dollar was evenly mixed against key currencies in thin trading even as the government released positive economic statistics.

Hillel Waxman, chief foreign exchange dealer with Bank Leumi Trust Co., said there really was not much activity in the dollar market because the holiday mood had set in, leaving trading thin.

In New York, the dollar closed at 122.74 Japanese yen, down from 122.95 yen on Wednesday. The dollar also closed at 1.5572 German marks, unchanged from the previous day.

Market Roundup, D6