NASDAQ Index Hits Still Another High : Market Overview
Smaller stocks led the way on financial markets, pushing blue chip industrial shares higher on Wall Street and lifting the NASDAQ index to its second record-high close in as many days.
* Government bond rates retreated on a mosaic of economic news, ranging from a positive inflation report to a rumor that the Federal Reserve had further room to ease interest rates.
Stocks
High-technology issues led the way, with the Dow Jones average rising 4.32 points to 3,267.88 after having been down about 10 points at mid-session.
In the broader market, advancing issues outnumbered decliners by more than 3 to 2 on the New York Stock Exchange. Big Board volume came to 304.55 million shares, up from Wednesday’s 245.36 million shares.
The NASDAQ index rose 8.92 points to close at a record 695.70, propelled by gains in technology shares. The previous high had been set on Wednesday at 686.78.
“It doesn’t look like it wants to stop,” said Robert O’Toole Sr., head of NASDAQ trading at Lehman Bros. “There was strength right across the board.”
The Labor Department said the producer price index of finished goods rose 0.2% last month, in contrast to analysts’ expectations of no change to perhaps a 0.1% rise.
The agency also reported a bigger than expected increase of 52,000 in initial claims for state unemployment benefits in the week ended Jan. 2. Claims for the week rose to 343,000 from 291,000 the previous week.
December retail sales rose 1.2% and, excluding brisk year-end auto sales, were up a better than expected 0.6%.
Analysts said neither development caused any big disruption in Wall Street expectations of continuing improvement in the economy over at least the early months of 1993.
Still, they said, the news seemed to help sustain the cautious atmosphere that has prevailed in the market all month.
Several technology stocks rang up dramatic gains in response to earnings reports, extending their early 1993 rally in the face of a sluggish overall market. Motorola soared 10 7/8 to 123 1/4 after the company posted sharply higher fourth-quarter profit.
* Digital Equipment climbed 7 3/8 to 42 1/4 in active trading. The company reported a narrower loss for the fiscal second quarter ended in December than it posted in the same period a year earlier.
* Intel, the most active issue in the NASDAQ market, rose 2 5/8 to 112 3/4 on top of an 8 1/8-point gain Wednesday, when the company came in with a quarterly earnings gain that far surpassed investors’ expectations.
* Xilinx, another NASDAQ issue, picked up 4 3/8 to 30 1/8. Profit for its fiscal third quarter ended Jan. 2 stood at 30 cents a share, up from 24 cents a share in the corresponding period a year ago.
* Parametric Technology, which also posted higher quarterly earnings, jumped 5 to 58 1/2 in NASDAQ trading.
Computer and other technology issues are seen on Wall Street as central participants in a continuing wave of business spending to improve productivity.
Securities-industry issues chalked up point-plus gains, evidently benefiting from expectations that the industry will realize commission and investment banking benefits from the new boom in technology stocks.
* Merrill Lynch gained 4 1/8 to 64 1/2; PaineWebber rose 1 7/8 to 26 1/8; Morgan Stanley was up 3 1/4 to 58 3/8; Bear Stearns added 1 to 17 3/4, and Charles Schwab Corp. gained 2 1/8 to 30 7/8.
* Merck & Co. fell 1 1/2 to 41 7/8 after Morgan Stanley lowered its earnings estimates on the drug company.
* Eastman Kodak rose 1 3/8 to 49 1/8 after Goldman Sachs made positive comments on the company’s new executive compensation plan.
Overseas, the London stock exchange reversed a string of losses and reported that the Financial Times 100-share average climbed 13.9 points to 2,759.2. Frankfurt’s 30-share DAX average finished up 7.24 points to 1,523.74. But in Tokyo, the 225-share Nikkei average was down 2.31 points to 16,515.60. The Japanese market is closed today for a holiday.
Credit
The yield on the Treasury’s main 30-year bond fell to 7.39% from Wednesday’s 7.43%. Its price, which moves in the opposite direction of the yield, was up 7/16 point, or $4.38 per $1,000 in face amount.
No single economic report dominated traders’ attention, said Raymond Dalio, president of Bridgewater Associates Inc. in Wilton, Conn.
Jim Sickling, a bond trader and senior vice president at Kemper Financial Services Inc. in Chicago, said trading activity received a jolt when a market rumor circulated that an unnamed Federal Reserve official reportedly said interest rates could be cut further.
Government bonds generally rally on the prospects of lower interest rates, which makes the securities more attractive than other investments, such as stocks.
Sickling said demand for longer-term bonds was dampened by another day of heavy activity in the corporate bond market. By late Thursday afternoon, Kemper analysts estimated $4.15 billion in new corporate bonds had been issued during the session.
The federal funds rate, the interest on overnight loans between banks, was 3.063%, up from 2.938% late Wednesday.
Currency
The dollar ended mostly higher on world currency markets, falling first on the economic news, but then recovering on the strength of U.S. bond prices.
The dollar slipped early in the day after the government released the weekly unemployment report.
Analysts quickly discounted the increase because jobless claims numbers are notoriously volatile during holidays. But the dollar initially traded down on the news, said Andrew Hodge, vice president of corporate treasury services at Bank Brussels Lambert, in New York. The dollar generally trades lower on bad economic news, because that augurs for lower interest rates that ultimately make the dollar less attractive to investors.
Once bonds responded positively to the economic data, the dollar recovered, Hodge said.
In New York, the dollar finished at 125.85 Japanese yen, up from 125.65. The greenback retreated to 1.620 German marks from 1.623.
The British pound fell to $1.538 from $1.549 late Wednesday.
Commodities
It was a buyer’s market for wheat futures Thursday on the Chicago Board of Trade, with the commodity gaining on signs of stronger export sales and a tightening supply picture.
Wheat for March delivery rose 4 cents to $3.793 a bushel; March corn fell 1 cent to $2.175 a bushel; March oats fell 1.25 cents to $1.455 a bushel; January soybeans dropped 5 cents to $5.778 a bushel.
Elsewhere, energy futures on the New York Mercantile Exchange broke through resistance prompted by fear of disruption of oil supplies during a confrontation with Iraq. A late rally caused most of the contracts to surge ahead before falling back slightly. Light, sweet crude for February delivery closed 20 cents higher at $18.70 a barrel.
In precious metal trading on the Commodity Exchange, gold fell 20 cents to $327.30 an ounce, and March silver slipped 2.2 cents to $3.675 an ounce.
