Most Stocks Edge Higher; : Bond Yields Slip Market Overview
Most stocks edged higher as investors continued to hunt for bargains, despite recent gloomy economic news. Smaller stocks led the market.
* The bond market closed mixed, as investors digested the Treasury’s announcement of a major shift in future borrowing patterns. Meanwhile, the dollar inched up.
Stocks
NASDAQ issues again turned in a better performance than blue chips, as investors searched for bargains among smaller stocks that have fallen sharply this spring.
The NASDAQ composite index rose 5.10 points, or 0.8%, to 683.26, its seventh straight gain. Winners topped losers 12 to 8 in that market.
Also, the American Stock Exchange market value index rose 1.13 points to 425.89, a new record. The Amex has been boosted by the rally in small energy stocks.
Meanwhile, the Dow industrials added just 2.91 points to 3,449.10. Big Board volume jumped to 274.24 million shares from 268.31 million Tuesday.
Analysts said that, despite recently gloomy economic news, many investors remain convinced that the economy will be strong enough to support decent earnings growth at many companies.
While overall the economic indicators have softened lately, some major components of the economy--such as auto sales--remain robust, experts noted.
Among the market highlights:
* Biotech stocks continued their recent rally, helping to buoy the NASDAQ market. Immune Response jumped 1 3/4 to 17 1/4, Amgen added 1 7/8 to 42 1/2, Immunex soared 2 1/2 to 54, Genentech rose 7/8 to 39 1/2, and Centocor gained 1 to 7 1/2.
* HMO and medical technology stocks also saw new life. Wellpoint Health rose 1 5/8 to 28 3/8, U.S. Healthcare zoomed 2 to 49 1/2, PacifiCare A surged 2 1/4 to 40 1/4, and Pacific Physicians was up 2 3/8 to 20 1/8.
Also, Tokos Medical jumped 1 3/4 to 8 3/4. A University of Mississippi study supported the effectiveness of the company’s monitoring system for pregnant women at risk of premature delivery.
* Computer and related stocks were mostly higher. Cisco Systems gained 1 3/8 to 46, Lotus surged 2 7/8 to 30 7/8, Motorola jumped 2 1/8 to 77 3/8, and Apple added 1 1/8 to 54 1/2.
Also, 3DO, a hot young San Mateo-based multimedia company that went public Tuesday at 15 a share, leaped 3 3/4 to 24.
* In the telecommunications area, Culver City-based IDB Communications rocketed 4 1/8 to 34 1/2 on NASDAQ. The fast-growing satellite communications firm announced a long-distance telephone service deal with Telefonica, Spain’s phone company.
* Among the day’s losers, lumber stocks sold off after Georgia-Pacific said the building business has been slowed this quarter by poor weather in many regions. G-P fell 2 1/4 to 63 7/8. Also, Louisiana Pacific tumbled 5 3/8 to 64 3/4, and Weyerhaeuser lost 2 to 43 1/8.
* Cable TV stocks fell in profit taking after Tuesday’s surge. Tele-Communications dropped 1 3/4 to 19 3/4, Time Warner slid 2 to 34 1/8, and Cablevision lost 2 1/2 to 30 3/4.
Overseas, shares closed lower in London, where the FTSE-100 eased 16.1 points to 2,796.5. Frankfurt’s DAX index slipped 4.21 points to 1,623.16. Tokyo markets remained closed for an extended holiday.
In Mexico City, the Bolsa index inched up 8.14 points to 1,642.47, stabilizing after its recent selloff.
Credit
Bond yields closed mostly flat in a confused session, as investors sorted through the Treasury’s announcement of a major change in its borrowing habits.
In the long-awaited announcement, the Treasury said it will end auctions of seven-year notes, and issue 30-year bonds only twice a year instead of four times--essentially shrinking the supply of those bellwether bonds.
Bond yields were riled by the news during trading, but closed largely unchanged from Tuesday. The yield on the 30-year bond slipped to 6.78% from 6.79% on Tuesday.
Yields on shorter-term bonds inched up by the close, as investors focused on the fact that the shrinkage of longer-term bond issuance will mean heavier Treasury borrowing in shorter maturities.
The yield on 30-year bonds had dropped sharply earlier this week, partly in anticipation of the Treasury’s announcement.
However, because the first semiannual auction of 30-year bonds is slated to take place in August, traders don’t expect to notice the reduced supply of the bonds until late next fall.
“The reality for the long end of the market is they have to deal with a bond sale next week and another one in August that will be even larger than recent bond sales,” said Dana Johnson, head of market analysis for First Chicago Capital Markets in Chicago.
Other Markets
The focus of the currency markets was the German mark, which has set the tone of currency trading for some time. The mark fell amid concerns about a continuing strike by metal workers in eastern Germany--which could further weaken the slumping German economy.
At the close, the dollar was quoted at 1.578 German marks in New York, up from 1.570 marks late Tuesday.
The greenback also rose to 110.55 Japanese yen, up from Tuesday’s 110.25.
Meanwhile, in commodities trading, the stronger dollar pushed gold futures lower on New York’s Commodity Exchange, while silver rebounded after recent heavy profit taking.
Gold for current delivery dropped 20 cents an ounce to $354.60, while silver added 2.4 cents to $4.29.
On the New York Merc, June light, sweet crude oil was 7 cents higher at $20.47 a barrel.
Market Roundup, D8
