FINANCIAL MARKETS : Intel Leads NASDAQ to New High : Market Overview

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

* The stock market was mixed again in a busy session, with blue chip stocks easing while the NASDAQ market surged to a record, fueled by rocketing Intel shares.

* Treasury bond yields inched up, while the dollar was boosted by increased Iraq-U.S. tensions.

Stocks

For the second day in a row, money fled from classic growth stocks such as drug and tobacco issues and poured into technology stocks and small stocks in general.

The Dow Jones industrial average slipped 2.71 points to 3,305.16, but its performance was totally overshadowed by the NASDAQ composite index, which jumped 7.51 points, or 1.1%, to a record close of 681.85.

NASDAQ, mostly a market of smaller stocks, was powered ahead Wednesday by computer chip giant Intel, one of the largest stocks that trades on that market. The firm’s shares zoomed 7 5/8 to a record 98 5/8, driven by continued optimism about chip industry sales and profits in 1993. Other tech stocks also continued to surge.

Meanwhile, drug stocks plunged anew on fears that the incoming Clinton Administration will crimp the companies’ profits. The decline in the drugs also dragged down other classic growth stocks, which ruled the market in the ‘80s.

Traders say investors increasingly are abandoning those stocks in favor of issues that have more to gain in a recovering economy--especially among smaller companies.

But some analysts warn that the market has taken on an excessively speculative aura. “The market is entering the new year enjoying three months of uninterrupted advances from October lows, so we have overbought and over-believed conditions,” said analyst Joseph Barthel at Fahnestock & Co.

Overall on Wednesday, advancing issues beat losers 12 to 8 on NASDAQ and 11 to 8 on the New York Stock Exchange. Big Board volume was a heavy 295 million shares.

Among the market highlights:

* Tech stocks rocketing with Intel included Apple, up 2 1/2 to 61 3/4; Compaq, up 1 5/8 to 49 3/4; Hewlett-Packard, up 2 3/4 to 72 3/4; Cabletron Systems, up 2 7/8 to 84 1/4; Autodesk, up 3 to 50 1/2; Texas Instruments, up 4 3/8 to 53 1/2; Media Logic, up 3 3/4 to 33 1/2, and Seagate, 1 3/4 to 21 1/4.

But, as on Tuesday, ex-bellwether IBM sank further, losing 7/8 to 48, its lowest level in a decade.

* Many industrial stocks posted gains. Chrysler leaped 3 to 36 1/8, its highest level since 1987, on optimism about its new models. The stock was added to the “recommended” list at the brokerage firm Furman Selz Inc. by influential analyst Maryann Keller. Keller increased her estimate for the auto maker’s 1993 earnings to $5 a share from $3.50.

Other strong industrials included Caterpillar, up 1 1/4 to 55 3/4; GM, up 3/4 to 34; FMC Corp., up 1 1/8 to 50 1/8; Varity, up 7/8 to 27; Trinova, up 2 to 23 1/4; Cummins Engine, up 2 1/2 to 78 7/8; Illinois Tool, up 1 3/8 to 67 3/4, and Magnetek, up 1 3/4 to 20 7/8.

* On the downside, sliding drug issues included American Home Products, off 2 1/4 to 64 1/2; Johnson & Johnson, down 1 1/2 to 46 7/8; Merck, off 1 1/8 to 42; Upjohn, which lost 3/4 to 31 1/8, and biotech issue Biogen, which fell 2 1/4 to 43 1/2.

Pfizer, meanwhile, slumped 1 5/8 to 68 1/4. A California appeals court upheld a lower court ruling that out-of-state Bjork-Shiley heart valve recipients can use California courts to sue Pfizer and its unit that produced the valve.

* Tobacco stocks also fell for a second day, after a new government study emphasized the dangers of secondhand smoke. Philip Morris lost 1 5/8 to 71 7/8, Loews sank 1 5/8 to 116 1/4, and American Brands dropped 1 5/8 to 37 3/8.

* Among other classic growth stocks falling, Home Depot lost 2 3/4 to 63 1/2, Wal-Mart fell 1 5/8 to 61, and Medtronic slid 3 1/4 to 89 1/8.

Overseas, London’s Financial Times 100-share average eased 7.6 points to 2,826.0.

Frankfurt shares also edged lower, with the DAX average losing 0.04 point to close at 1,556.38.

In Tokyo, the Nikkei average finished down 59.70 points at 16,782.88.

Bonds

Interest rates were little changed, with the yield on the Treasury’s 30-year bond at 7.35%, up from 7.33% Tuesday.

After an early selloff, traders’ sentiment toward bonds was helped by the Treasury’s announcement that it will issue $9.75 billion worth of seven-year notes Jan. 13. That represents no increase from last quarter’s refunding. The market had expected the issuance to rise to $10 billion.

Meanwhile, traders have been hedging this week against their purchases of corporate bonds. Corporate issuance has been heavy as companies moved to take advantage of a drop earlier this week in long-term rates.

The federal funds rate, the interest on overnight loans between banks, was 3.75%, up from 3% late Tuesday.

Other Markets

The dollar gained as traders focused on a U.S. ultimatum to Iraqi leader Saddam Hussein to remove his antiaircraft missile batteries from the “no-fly zone” in southern Iraq, a sanction imposed in the aftermath of the Persian Gulf War.

In New York, the dollar rose to 1.634 German marks from 1.626 Tuesday, and to 125.15 Japanese yen from 124.85.

Elsewhere, live cattle for February delivery rose 6 cents to settle at 78.70 cents a pound after trading as high 79 cents, a new life-of-contract high, on supply worries.

Meanwhile, light, sweet crude oil for February delivery dropped 22 cents to $19.04 a barrel on the New York Mercantile Exchange.

On New York’s Commodity Exchange, January gold rose $1.10 to $329.80 an ounce, and March silver rose 1.8 cents to $3.71 an ounce.