Dow Dips 2.16; Gold Surges $4 : Market Overview
Stocks posted another mixed showing, still marking time after last week’s surge. The Dow industrials lost ground for a third day.
* Long-term interest rates jumped after the Treasury’s auction of new 10-year notes got a surprisingly cool reception.
* Gold rose $4 an ounce in what traders described as mostly a technical rally, influenced in part by foreign currency turmoil.
Stocks
The market seesawed as buyers and sellers continued to realign their positions, one week after blue chips hit new highs.
While sellers have attempted to rout certain stocks in recent days, the market has shown remarkable resilience.
The Dow industrials, for example, were down as much as 20 points Wednesday, but rallied back to close off just 2.16 points to 3,412.42--despite a late rise in interest rates.
In the broader market, advancing issues slightly outnumbered declines on the New York Stock Exchange, where volume came to 251.91 million shares, up from Tuesday’s 239.96 million.
The NASDAQ market of smaller stocks, the market hardest hit by profit takers in recent weeks, rallied a bit on Wednesday. The NASDAQ composite index gained 2.81 points to 695.02.
Alan Ackerman, analyst at Reich & Co., said investors were rotating from one stock sector to another, looking for bargains. “This is a trader’s paradise, but one has to be quick,” he said. “And in a market such as this, gears and sentiment shift very quickly.”
Underpinning demand for stocks is belief in a growing economy. The newsletter Blue Chip Economic Indicators reported Wednesday that the economists it polls now expect 3.1% growth in the economy this year. That would be the best showing since 1988.
Among the market highlights:
* Semiconductor stocks, the market’s leaders in the fourth quarter, came back to life on news that industry orders topped $2 billion for the first time last month.
Intel leaped 4 to 114 1/2, Motorola gained 2 1/8 to 55 7/8, Texas Instruments added 2 to 53 3/8, and National Semiconductor rose 3/8 to 10 3/4.
* Auto stocks had another good day. Ford gained 7/8 to 49 3/4 even as the company reported a widened fourth-quarter loss. Chrysler rose 1 to 40 1/4, and GM was up 7/8 to 39 1/4.
* Telephone stocks were mostly higher after NYNEX unveiled its Voicedialing, a service that allows customers to place calls simply by saying a name or phrase into the phone. NYNEX jumped 1 5/8 to 86 3/8, Bell South gained 7/8 to 54, Ameritech rose 1/2 to 74, and Bell Atlantic inched up 1/2 to 53 5/8.
* Cable TV stocks also continued to rally one day after Southwestern Bell launched a $650-million bid for a private cable firm. Jones Intercable rose 3/4 to 16 1/2, Comcast leaped 1 1/4 to 23, and Telecommunications Inc. gained 7/8 to 25.
* Gold stocks were hot as the metal’s price gained. ASA rose 1 7/8 to 38, American Barrick jumped 1 1/2 to 33 1/2, and Homestake Mining added 7/8 to 12 3/4.
Overseas, Frankfurt’s DAX index rose 8.23 points to 1,649.81, while London’s FTSE-100 index fell 14.9 points to 2,816.40.
In Tokyo, the Nikkei average added 67.63 points to 17,089.90.
Credit
Bond yields held steady for most of the day in anticipation of a good 10-year Treasury note auction, then shot up after the auction results were announced.
“The results failed to live up to the optimistic scenario,” said Kevin Flanagan, economist at Dean Witter Reynolds Inc.
The notes’ average yield of 6.33% was close to expectations. But the disparity among bids was wider than normal, indicating that dealers weren’t confident they could sell what they bought.
That sets the stage for a potentially difficult auction of 30-year T-bonds today. Wednesday, the yield on existing 30-year bonds finished at 7.24%, up from Tuesday’s close of 7.20%.
Commodities
Gold posted its strongest gain in five months as a confluence of events sparked a technical rally.
Near-term gold futures leaped $4 on New York’s Comex to $333.40 an ounce, the highest settlement price since Dec. 30.
Silver futures also surged: The March contract shot up 6.2 cents to $3.76 an ounce.
Traders said gold buying was partly influenced by new turmoil in currency markets, which can temporarily send traders into safe havens such as precious metals.
Inflation fears were also revived Wednesday, when the Commodity Research Bureau’s index of key commodities surged 2.56 points to 202.23.
However, many traders doubt that gold’s rise marks the start of a strong rally. The gain Wednesday was mostly the work of short-term traders who may exit once the metal reaches $335 or so, some analysts said.
Elsewhere, near-term crude oil rose 13 cents to $20.18 a barrel on the New York Merc.
Currency
The dollar continued to hold at lower levels against the Japanese yen, one day after plunging on expectations that the yen will continue to strengthen.
The dollar fell in New York to 121.15 yen from 121.28 Tuesday.
Rumors on Tuesday suggested that the Clinton Administration wants Japan to boost the value of the yen as a way of shrinking Japan’s trade deficit with the United States.
Meanwhile, the dollar closed higher against the German mark, reaching 1.660 marks in New York versus Tuesday’s 1.654.
In Germany, Economics Minister Guenter Rexrodt predicted that Germany’s gross domestic product would decline by 0.5% this year.
Market Roundup, D6
