FINANCIAL MARKETS : Nasdaq Sets Record; Gold Bounces Back : Market Overview
The Nasdaq market leaped into record territory Thursday on the strength of technology shares, while blue-chip stocks were dogged by worries over earnings.
* Long-term bond yields fell moderately for a second straight day
* Gold prices bounced back strongly as speculators bought precious metals as insurance against the financial risk of a Russian uprising.
Stocks
Blue-chip stocks were the laggards of the session, and the Dow Jones industrial average finished with a loss of 7.27 at 3,539.75.
Weakness in several cyclical issues weighed down the indicator. However, the broader market gauges wound up in the plus column.
Shares rising in price outnumbered those declining by about 5 to 4 in the final tally on the NYSE. Volume on the floor of the Big Board came to 275.35 million shares as of 4 p.m., down from 288.96 million in the previous session.
The standout performer of the day was the Nasdaq system, where the composite index rocketed to a new high of 752.26, up 6.72. It swept past the previous peak of 749.71, reached Sept. 3 on strength in computer, communications and biotechnology issues.
Blue-chips were were hounded by some declining issues.
Traders cited losses in Dow components Eastman Kodak, which slipped 1 1/4 to 57 5/8, and International Paper, down 3/4 to 59 3/8.
“The Dow is being plagued by a few issues plus the lack of any issues in there that are really exciting,” said A.C. Moore, market analyst at Argus Investment Management.
A $425-million merger agreement between Value Health Inc. and Preferred Health Care Ltd. was drawing buyers to many small-cap health maintenance organizations, said Jim Schroeder, a market analyst at MMS International.
Investors were also attracted to smaller companies by their earnings potential, analysts said.
* In equity trading, Travelers topped the NYSE’s list of active issues, gaining 1 1/8 to 37 3/4. Primerica’s plan to buy the 73% of Travelers it doesn’t already own, in a stock swap deal worth about $4.2 billion advanced to the final stages. Primerica rose 7/8 to 48 1/4.
* Wal-Mart Stores was the second most heavily traded Big Board stock, and it rose 3/4 to 25. The Wall Street Journal’s influential Heard on the Street column had favorable comments on retailers’ prospects.
* One of the Big Board’s biggest losers was Storage Technology, which tumbled 2 1/2 to 25 3/4 in heavy trading. The company said its third-quarter results will be below analysts’ expectations. It also expects to show a loss from ongoing operations of about $25 million.
* Drug and medical stocks made minor movements in the wake of President Clinton’s speech Wednesday night outlining broad details of his health care reform proposal. Merck rose 3/8 to 31 7/8; Glaxo gained 1/2 to 20 1/8; Schering-Plough added 2 to 65 1/4, and Pfizer rose 2 1/4 to 62 5/8.
On the Nasdaq system, US Healthcare jumped 3 3/8 to 49 1/8.
Equity markets overseas turned in mixed performances. Frankfurt’s 30-share DAX finished 23.51 points firmer at 1,916.51. At the same time London’s Financial Times 100-share average fell 6.2 points to 3,001.3. The Tokyo market was closed for a national holiday.
Bonds
A report signaling lingering weakness in the job market cheered the bond market in the early going. The Labor Department said the number of Americans filing first-time claims for jobless benefits shot up by 11,000 last week to the highest level in seven weeks.
The negative economic news reassured some investors in fixed-income securities that the economy continues to languish and poses no immediate inflation pressures, which can hurt the value of bonds.
But tempering the bond market’s enthusiasm was news from the automotive industry showing car sales were on the high side of expectations for the latest reporting period.
The Treasury’s main 30-year bond yield finished the day at 6.06%, down from 6.09% Thursday. The bond’s price, which moves in the opposite direction, up as much as 1 point in the early going, ended up only 5/16 point, or $3.13 per $1,000 in face value.
The federal funds rate, the interest on overnight loans between banks, was 3.063%, up from 3% late Wednesday.
Other Markets
A general rise in other commodity prices--crude oil, soybeans, corn, coffee and livestock futures all advanced--stimulated additional interest in gold as an inflation hedge, analysts said.
Gold for current delivery gained $4.10 to settle at $358.00 an ounce on the New York Commodity Exchange, a day after gold fell $9.00 an ounce. Silver for current delivery gained 11.8 cents an ounce to close at $4.158.
Reports of a gun battle at the Moscow military command headquarters of the Commonwealth of Independent States prompted investment funds to head back to the gold market.
Elsewhere, light sweet crude oil for November delivery ended 4 cents higher, at $17.63 a barrel.
Meanwhile, the dollar rose against European currencies amid the political unrest in Russia. The dollar declined against the yen in trading as analysts tried to determine the effect of a Japanese economic stimulus package. The dollar was quoted at 105.94 Japanese yen in New York, down from 106.18 yen late Wednesday. The greenback rose to 1.64 German marks, up from 1.63 on Thursday.
Market Roundup, D6
