Dow Gains 15 as Bond Yields Fall : Market Overview

Treasury bond yields fell sharply on fresh signs of a weak U.S. labor market and upbeat comments from Federal Reserve Chairman Alan Greenspan. The yield on 30-year Treasury bonds tumbled to 7.19% from 7.24% on Wednesday.

* Blue chip stocks pushed ahead slightly, though smaller issues again were hit by profit takers. Oil stocks rocketed as oil jumped in price.

Credit

Bond yields rose at first, on news that the head of the Senate Energy Committee had introduced a bill to boost oil prices--which would be inflationary, at least initially.

But word that the number of Americans filing claims for state jobless benefits rose a slight 2,000 to 364,000 in the latest week rallied bonds. It marked the third weekly increase in a row, and cast doubt on expectations of strong economic growth this quarter.

Also, traders took heart from Treasury Secretary Lloyd Bentsen’s comments that deficit-reduction remains a key Clinton Administration goal.

Finally, Fed Chairman Greenspan repeated his assertion that long-term rates could fall significantly if the deficit is cut.

By the close, yields were down across the board, and the 30-year bond yield, at 7.19%, was again approaching the 7.17% level hit earlier in the week--which was the lowest yield since August, 1986.

Stocks

Blue chip stocks were propelled higher by gains in oil issues after crude prices soared on the Senate proposal for an oil import fee.

The Dow industrial average closed up 14.86 points at 3,306.25. In the broader market, advancing issues nosed out declines 909 to 900 on the Big Board, where volume fell to 256.98 million shares from 277.50 million Wednesday.

However, in the NASDAQ market of mostly small stocks, losers topped winners 1,046 to 929, and the NASDAQ composite index fell another 0.5%. On Wednesday, profit takers pushed the index down 1.3%, its biggest decline since September.

Traders said the market remains vulnerable. On one hand, lower bond yields are bullish for stocks. But suspicion may be growing that the economy is about to cool off again, despite strong fourth-quarter growth.

Among the market highlights:

* Energy stocks helped buoy the Dow, as crude prices zoomed. An energy tax could essentially boost the value of U.S. oil reserves, in the process boosting the net worth of energy companies.

Exxon gained 1 1/8 to 61 5/8, Chevron added 1 3/8 to 72 1/2, Arco leaped 2 7/8 to 117 7/8, Pennzoil jumped 1 3/4 to 53, and Unocal added 5/8 to 26.

* Chrysler gained 3/4 to 39 7/8 after reporting a fourth-quarter profit of $1.12 a share, up from 33 cents a share a year earlier.

* Service Merchandise tumbled 3 7/8 to 11 1/4. Late Wednesday the company reported flat fourth-quarter earnings.

* Technology stocks were again hit hard by profit takers. Intel slumped 3 5/8 to 109, Compaq dropped 2 3/4 to 52 1/8, Creative Technology lost 2 1/2 to 31 3/4, Motorola fell 1 1/2 to 55 7/8, and Texas Instruments gave up 1 3/8 to 52 1/8.

* UAL, which posted a $223.9-million loss for the fourth quarter, dropped 3 1/4 to 122 1/4.

Overseas, stocks finished sharply higher in Tokyo on speculation of an interest rate cut. The 225-share Nikkei average was up 553.73 points, or 3.35%, to 17,063.41.

Meanwhile, disappointing trade figures for December sent London stocks lower, with the Financial Times 100-share average losing 15.6 points to close at 2,816.9.

In Frankfurt, the DAX average rose 5.52 points to 1,567.84.

In Mexico City, the Bolsa index suffered another heavy blow as profit takers rushed in. The index fell 59.86 points to 1,680.83.

Other Markets

The dollar was mixed against other major currencies in quiet trading, as German firmness on interest rates held the currency from rising on a positive fourth-quarter economic report.

In New York, the greenback closed at 124.20 Japanese yen, up from Wednesday’s closing bid of 124.10 yen. The dollar settled at 1.586 German marks, down from 1.587. The British pound rose to $1.516 from Wednesday’s $1.511.

Meanwhile, in the commodity markets, gold rose in domestic trading, up 60 cents to $330.50 an ounce, and silver gained 2.6 cents to $3.708 an ounce on the New York Commodity Exchange.

Market Roundup, D6