Dow Gains 8.64; Bonds Close Flat : Market Overview
Stocks ended mostly higher as buying of perceived bargains offset profit taking in other groups.
* Long-term Treasury bond yields fell in early trading but reversed later in the day to close mostly unchanged.
Stocks
Investors rushed into transportation and defense issues while exiting downtrodden health care stocks that had bounced up on Tuesday and Wednesday.
The Dow Jones industrial average closed up 8.64 points at 3,365.14.
Though advancers beat decliners by about 4 to 3 on the Big Board, volume shrank to 260.05 million shares from Wednesday’s 316.75 million--a measure of investors’ growing caution.
The NASDAQ market of smaller stocks had a better day than blue chips. The NASDAQ composite index rose 4.61 points to 667.07 as gains in computer stocks offset a steep selloff in some biotech issues.
“Money continues to move around very quickly and viciously,” said Elliot Spar, an options trader at Gruntal & Co. But Spar argued that the market is showing an “underlying resiliency” by refusing to sell off sharply despite concerns about President Clinton’s economic proposals.
Among the market highlights:
* Airline stocks recovered sharply, despite being forced by a Justice Department lawsuit to curtail information about air fares. Some investors appeared to be betting that airline issues had fallen too low on recent selling caused by economic concerns.
AMR Corp., parent of American Airlines, jumped 3 3/8 to 60 3/4; Delta rose 2 1/4 to 50 3/8, and UAL, parent of United, leaped 5 1/4 to 119 1/4.
The airlines’ gains helped push the Dow transportation index up 25.99 points, or 1.7%, to 1,532.20.
* Defense stocks rose smartly after top-level executives made presentations at an industry conference. General Dynamics rose 3 3/4 to 117 5/8, Grumman added 1 3/8 to 31 1/8, Lockheed advanced 1 3/4 to 58 3/4, and McDonnell Douglas gained 2 5/8 to 53 1/2.
* Biotech issues were mixed. Amgen plunged 9 1/4 to 37 after reporting late Wednesday that first-quarter earnings would be 10% to 15% below analysts’ expectations. Also falling were Synergen, off 1/4 to 14 3/4; Chiron, down 1/2 to 48 3/4, and Genzyme, down 3/4 to 31 3/4.
But Biogen rose 1 1/4 to 29 1/4 as some of the cash leaving Amgen stock appeared to flow into it.
* Drug stocks in general were down after rallying Tuesday and Wednesday. Warner-Lambert lost 1 3/8 to 64 1/2, Pfizer eased 5/8 to 57 1/8, and Syntex fell 5/8 to 18 3/4.
* Computer stocks profited from investors’ continued interest in Clinton’s support for technology development. IBM rose 1 7/8 to 53 3/4, Compaq added 1 7/8 to 46 7/8, Apple was up 1 1/8 to 54 3/4, Digital Equipment soared 1 3/8 to 48 1/4, and Novell leaped 2 5/8 to 29 1/4.
* Casino stocks rebounded from a recent selloff. Mirage rose 1 to 36 1/2, Caesars World added 2 1/8 to 43 7/8, and Promus leaped 3 to 57.
* Eastman Kodak finished up 2 5/8 at 53 in heavy trading. The company’s chief financial officer told Dow Jones News Service that he is willing to sell assets to cut the company’s debt load.
Overseas, shares rebounded in Frankfurt. The DAX average closed 14.67 points up at 1,658.91. In London, the Financial Times 100-share average gained 11.7 points to finish at 2,828.7.
In Tokyo, the Nikkei average ended the day 108.45 points higher at 16,907.39.
In Mexico City, the Bolsa index fell for a fourth day, losing 11.53 points to 1,504.11. Mexican stocks have been hurt by worries that Clinton will delay the proposed North American Free Trade Agreement.
Credit
Thirty-year Treasury bond yields closed unchanged at 6.88% after a volatile trading session.
Yields fell across the board early on, then rose late in the day, unable to challenge the record low yield of 6.82% on the 30-year bond reached Tuesday.
“The market was all over the map,” said Michael Moran, chief economist for Daiwa Securities America Inc. In the absence of any significant economic news, he said, “this type of erratic movement indicates that the market is groping for direction.”
However, Moran and other analysts said the likelihood is fading for a repeat of the rally earlier in the week that sent yields plunging. “The downward movement in interest rates is beginning to cool off,” he said.
The federal funds rate, the interest on overnight loans between banks, was 3.125%.
Other Markets
The dollar finished mixed against major foreign currencies while the market waited to see what the economy’s true strength is and what the Group of Seven industrial nations might decide this weekend.
Andrew Busch, a vice president in charge of foreign exchange at Harris Trust & Savings Bank in Chicago, said the dollar had been fairly range-bound before it moved upward on the German mark at the end of the day.
Traders betting the dollar would decline indulged in some short selling in anticipation of revised fourth-quarter gross domestic product numbers due today and what would come out of the G7 meeting this weekend, Busch said.
In New York, the dollar was quoted at 1.635 German marks, up from Wednesday’s close of 1.627 marks. It also settled at 117.48 Japanese yen, unchanged from late Wednesday.
The British pound was quoted at $1.432, more expensive than $1.431 late Wednesday.
Elsewhere, light, sweet crude oil rose 8 cents to $20.61 a barrel on the New York Merc.
In precious metals trading on New York’s Commodity Exchange, near-term gold rose 20 cents to $329.90 an ounce while silver fell 2.1 cents to $3.54 an ounce.
Market Roundup, D6
