Stocks Extend Rise as ’92 Nears End : Market Overview

Highlights of Wednesday’s market activity, compiled from Times staff and wire reports:

* Stocks ended higher on new signs of a strengthening economy. The NASDAQ small-stock index hit another record high.

* Yields on short-term Treasury securities plunged, though traders cautioned that the rally is related to seasonal financing needs of municipalities.

Stocks

Stocks gained ground in a broad but relatively quiet year-end rally.

The Dow Jones industrials climbed 10.26 points to 3,321.10, rebounding from a 22.42-point setback Tuesday.

Advancing issues outnumbered losers by more than 4 to 3 on the New York Stock Exchange, where volume fell to 183.93 million shares from 228 million Tuesday.

The small-company stock market again stole the show, as the NASDAQ composite index rose 2.84 points to a record 671.85.

Investors hoping for continued signs of economic improvement got another one Wednesday: The Commerce Department reported that its index of leading economic indicators rose 0.8% in November on top of an upward-revised October increase of 0.5%.

The November gain was the biggest in 10 months, and was slightly above the consensus expectation on Wall Street.

With retailers reporting this week that Christmas sales were exceptional, the leading indicators figure added more credence to the idea that the economy is on solid footing entering 1993--which augurs well for corporate earnings.

With one session left in 1992, the Dow is up 152.27 points, or 4.8%, from last New Year’s Eve. The NASDAQ composite is up 85.51 points, or 14.6%.

Among the market highlights:

* Many industrial issues showed big gains, as investors hunted for potential beneficiaries of the improving economy. International Paper was up 1 to 66 1/2, Alcoa rose 1 1/8 to 71 3/4, Ford jumped 1 1/8 to 43 1/2, Dow Chemical added 1 1/2 to 58, Illinois Tool Works soared 1 7/8 to 66 7/8, and fluid-systems maker BWIP zoomed 2 3/8 to 29 3/4.

* Retail issues, which began to run into resistance Tuesday from sellers cashing in on the group’s recent gains, posted mixed results again. Nordstrom leaped 2 1/8 to 40, Woolworth added 5/8 to 32 1/4, and Tiffany jumped 1 3/8 to 34 1/2, but May Department Stores lost 1 1/8 to 70 3/8, and Limited slipped 1/4 to 27 3/4.

* Many tech stocks resumed their rally. BMC Software soared 2 1/4 to 70 1/2, Cisco Systems gained 1 1/8 to 78 5/8, Retix added 1 1/8 to 17 3/8, System Software leaped 2 to 24, and Xircom added 1 1/4 to 9 1/2.

* End-of-year Food and Drug Administration new-drug approvals continued to move some pharmaceutical and biotech issues. Cytogen rocketed 3 1/4 to 22 1/4 after the FDA approved two biotechnology products developed by the company for diagnosing cancer.

Also, Smithkline Beecham’s American depositary shares rose 1 5/8 to 33 1/2 on word of FDA approval for the company’s Paxil anti-depression drug.

Glaxo, whose new migraine drug was approved by the FDA on Tuesday, added 5/8 to 24 after rising 1 1/8 on Tuesday.

* Roadway slid 1 1/2 to 68 1/4 after the trucking firm lost J. C. Penney’s $160-million-a-year package-shipping business to private United Parcel Service.

In overseas trading, London shares finished lower. The Financial Times-100 index dropped 15.3 points to 2,832.5.

In Frankfurt, the DAX index ended the final trading session of 1992 little changed from Tuesday and about 2% below 1991’s close. It added 2.82 points to 1,545.05.

In Mexico City, the Bolsa index also ended the year on a feeble note. It rose 1.34 points to 1,759.44. For the year, the index was up a nominal 22.9%. The market will be closed until Monday.

Credit

Yields on short-term Treasury bills tumbled thanks to year-end buying by municipalities that are refinancing their debt.

The discount rate on three-month T-bills plummeted to 3.05% from 3.17% on Tuesday. On one-year T-bills, the discount rate dropped to 3.40% from 3.46%.

Traders say so-called defeasance of debt by municipalities is helping pull down yields on most Treasury securities maturing in five years or less. The trend has been magnified by the low volume that dominates the holiday season.

Such transactions involve a municipality with outstanding debt issuing new bonds to take advantage of the rally in the market and lock in lower interest rates. The proceeds of that second sale are put into escrow accounts and invested in Treasury securities until the original bonds can be called and replaced by the second, more advantageous issue.

Meanwhile, longer-term bond yields inched up. The yield on 30-year T-bonds was 7.37%, up from 7.36% Tuesday.

The federal funds rate, the interest on overnight loans between banks, was 2.0%, unchanged from late Tuesday.

Other Markets

The dollar was mixed in very quiet trading, with most participants already sidelined for the New Year’s holiday.

In New York, one dollar bought 124.60 Japanese yen by late afternoon, down from 124.73 Tuesday. The dollar also closed at 1.616 German marks, up from 1.614.

In commodity markets, January gold futures rose 30 cents to $332.80 an ounce on New York’s Comex; January silver climbed 3.2 cents to $3.68.

Crude oil prices edged lower in uneventful trading on the New York Mercantile Exchange. Light, sweet crude for February delivery dropped 5 cents to $19.59 a barrel.

Market Roundup, D6