Christmas Eve Rally Pushes Dow Up 12.70 : Market Overview
Highlights of Thursday’s market activity, compiled from Times staff and wire reports:
* Blue chip stocks closed higher in a Christmas Eve rally fueled by a recovery in shares of International Business Machines and new highs in American Telephone & Telegraph. The Dow Jones industrial average was up 12.70 points to 3,326.24.
* Treasury bond prices ended mixed, with many participants out of the market ahead of the Christmas holiday.
* The dollar edged higher against other major currencies in thin trading.
Stocks
Volume on the New York Stock Exchange was 96 million shares, the lightest of the year, compared to 229 million shares traded Wednesday. It was the lightest daily total since a 76.82-million-share day on Nov. 29, 1991, a Friday after Thanksgiving.
The stock market closed two hours early at 11 a.m. Pacific time for Christmas Eve. It will be closed today for Christmas.
Analysts said AT&T; was becoming the new blue chip market leader, replacing IBM, which sank recently to an 11-year low. AT&T; jumped 1 1/2 to a record high of 52 3/4. IBM also rose 1 1/2 to close at 52 3/4.
“There’s a new leader here on the street, and it’s called Ma Bell,” said James Andrews of Janney Montgomery Scott.
Bear Stearns repeated a buy rating on AT&T;, saying that disappointment in other blue chips helped move the stock higher.
Analysts said the market largely ignored disappointing news that weekly jobless claims rose by 12,000 to 360,000 in the week ended Dec. 12. It was the second week in a row that jobless claims rose, reversing several weeks of decline.
The latest total was above Wall Street’s expectations of a decline to 342,000 claims on a seasonally adjusted basis.
“The data reinforces the point that the improvement in the labor market will be gradual,” said Marilyn Schaja, economist at Donaldson, Lufkin & Jenrette.
The market gains were expected to continue into next week, analysts said.
“I think (Thursday’s session) bodes well for the rally to extend into the new year,” said Patrick O’Malley, managing director at Needham & Co.
Advances led declines 944 to 690 on the NYSE. Standard & Poor’s composite index of 500 stocks rose 0.74 of a point to 439.77. The American Stock Exchange index was up 1.38 at 394.17. The NASDAQ composite index rose 2.92 to 665.88.
Among the market highlights:
* Pharmaceutical stocks turned mixed after a broad decline Wednesday attributed to year-end selling and worries about profit growth in the industry in the face of health care reform.
Merck slipped 1/4 to 44 3/4, and Abbott Laboratories lost 1/8 to 31 1/4, but Bristol-Myers Squibb rose 3/4 to 68 1/8, and Eli Lilly gained 1/8 to 63 1/4.
Lilly said the Food and Drug Administration approved a 10-milligram capsule form of its anti-depression drug Prozac to go with 20-milligram capsules and a liquid form in which the product is now available.
* Raytheon gained 1 1/4 to 52 3/4. The company’s missile systems division received a $1.03-billion contract to provide Saudi Arabia with Patriot missiles and related equipment.
Technology stocks fueled the rise in the NASDAQ composite index. Novell topped the NASDAQ most-active list, gaining 1 3/8 to 27 1/2 and rebounding from recent losses. Sequent Computer added 1 7/8 to 21 1/4, Cisco Systems gained 1 to 75 1/4, and Maxtor was up 3/8 to 14 1/4.
* Bell Atlantic lost 3/4 to 53 after Josephthal, Lyon & Ross downgraded the company.
* Ventritex surged 4 1/8 to 35 1/4 after the company said it received an “approvable” letter from the FDA for its Cadence implantable defibrillator system.
* Medicine Shoppe fell 1 to 25 1/2 on a downgrading by A. G. Edwards.
Overseas, in London, the Financial Times index of 100 leading shares ended 0.1 point higher at 2,827.5, a rise of 37.8 on the week. The Frankfurt market was closed for the Christmas break.
Tokyo’s 225-share Nikkei average fell 41.82 points, or 0.24%, to 17.648.85; the Japanese market will be open today. Hong Kong’s blue chip Hang Seng index closed up 124.02 points, or 2.33%, at 5,442.01. For the week it rose 249.35 points.
Credit
The yield on the Treasury’s main 30-year bond was up to 7.36% from 7.35% late Wednesday. Its price, which falls when yields rise, declined 3/32 point, or 94 cents per $1,000 in face amount.
Volume was thin, and the market closed early at 11 a.m. Pacific time for the holiday.
The market disregarded the jobless claims report; many analysts had expected the number to fall.
Paul Kasriel, an economist at Northern Trust Co. in Chicago, said the jump in jobless claims is not large enough to dissuade traders that the economy is recovering. He noted that the four-week moving average, a more widely respected measure of unemployment claims, is down.
Yields on three-month Treasury bills were unchanged at 3.22% as the discount held at 3.16%. Yields on six-month bills rose to 3.39% as the discount rose 1 basis point to 3.30%. Yields on one-year bills were unchanged at 3.59% as the discount held at 3.46%.
The federal funds rate, the interest on overnight loans between banks, was 6%, unchanged from late Wednesday.
Currency
Sentiment toward the dollar remained bullish, with many participants expecting a mild rally come January.
Dealers reiterated the view that a stronger U.S. economy next year would boost interest rates, while rates would ease in Germany as growth slows. This idea, buttressed by comments this week by the head of the Bundesbank on the possibility of lower interest rates, was keeping the dollar strong as the year winds down.
At midafternoon, the dollar stood at 1.5995 marks, up from Wednesday’s close at 1.5953 marks. Earlier in London, it settled at 1.5920 marks.
In Tokyo, the dollar closed at 123.67 yen, down from 123.80 on Wednesday. In London, the dollar was little changed at 123.80 yen. In New York, the dollar rose to 123.90 yen from 123.85 Wednesday.
Other dollar rates as of 11 a.m. Pacific time in New York, compared to Wednesday’s closing rates, included 1.4495 Swiss francs, up from 1.4440; 5.4550 French francs, up from 5.4415; 1,428 Italian lira, up from 1,420, and 1.2608 Canadian dollars, from 1.2603.
Commodities
Wheat futures prices at the Chicago Board of Trade closed mostly higher Thursday in light, pre-holiday trading, because of concerns that freezing temperatures would damage the developing wheat crop.
March wheat closed off 1/4 cent to $3.58 1/2 per bushel, while March corn ended steady at $2.19 3/4, and soybeans closed up 1 3/4 to $5.77 1/4 per bushel.
Gold prices were unchanged from Wednesday on the Commodity Exchange, where bullion for current delivery closed at $332.90. A late quote from Republic National Bank said spot gold rose 15 cents to $333.15.
Market Roundup, D6
