Dow Inches Up as 30-Year Bond Yield Stabilizes : Market Overview

* U.S. stocks stabilized Monday, closing mostly higher in cautious trading. Most overseas markets also calmed after heavy profit taking late last week.

* Long-term Treasury bond yields were unchanged as the recent bond selloff abated. Traders are awaiting today’s October wholesale inflation report.

Stocks

Stability in the bond market encouraged bargain hunters on Wall Street, although low trading volume suggested a lack of conviction after last week’s sharp decline.

The Dow industrials closed up 4.47 points to 3,647.90 on the heels of Friday’s 18.45-point rise. Still, the Dow remains off 1.3% from its peak, reached last Tuesday.

Smaller-stock indexes posted bigger percentage gains. The Russell 2,000 rose 1.46 points to 254.57.

Breadth also improved, as winners topped losers 12 to 9 on the New York Stock Exchange and 13 to 11 on Nasdaq, but trading volume was weak. Only 234 million shares changed hands on the NYSE, the lowest since mid-October.

Analysts say stock investors continue to be wary of prospects for higher interest rates as the economy improves. However, the brighter economic picture also is focusing new attention on rising corporate earnings.

“There are enough people saying: ‘Here’s an opportunity. Why should the market go down when the economic news has been pretty positive?’ ” said James Melcher, president of Balestra Capital.

Calm trading in foreign markets Monday helped Wall Street.

In Frankfurt, the DAX index slipped just 1.75 points to 2,010.81 after diving 50.05 points Friday. In London, the FTSE-100 index eased 8.0 points to 3,077.6 after tumbling 63.4 points Friday.

In Tokyo, the Nikkei-225 index added 34.70 points to 18,625.16.

But Mexico City stocks were slammed on new worries about the North American Free Trade Agreement’s prospects. The Bolsa index plummeted 40.15 points, or 2%, to 1,927.92 on thin volume.

Among U.S. market highlights:

* Some interest-sensitive stocks, which were hammered last week as interest rates rose, attracted bargain hunters. Primerica jumped 1 1/2 to 42 1/8, Nationsbank added 1/2 to 46 1/2, Morgan Stanley gained 1 1/2 to 75 1/8, Charles Schwab surged 2 1/2 to 32 1/2 and Wells Fargo rose 1 1/2 to 110 5/8.

But sellers continued to pound other financial issues. BancOne fell 1 1/8 to 35 3/4, Bankers Trust lost 5/8 to 75 1/4 and Unitrin slid 1/2 to 41.

* Battered utility stocks continued to lose ground, though at a slower pace. The Dow utility index eased 0.13 point to 227.13.

* Many technology issues rebounded. Hewlett-Packard leaped 1 3/4 to 75 3/4, AST Research gained 1 to 22, Cabletron Systems rose 2 7/8 to 92 1/8, Dell Computer surged 1 3/8 to 23 3/4 and Newbridge Networks was up 1 3/4 to 60.

* Industrial stocks also had a good day overall. Cummins Engine gained 2 1/2 to 99 1/8, Chrysler rose 1 to 55 1/2, Clark Equipment added 1 1/4 to 49 3/4, GM Hughes jumped 1 1/2 to 39 3/8 and Monsanto was up 7/8 to 79.

* Casino stocks surged after Oppenheimer & Co. and Seidler Cos. analysts made positive comments about some of the issues. Mirage Resorts soared 1 3/8 to 23 3/8, Promus added 7/8 to 68 1/8 and Caesars World gained 1 1/2 to 44 1/2.

* Health maintenance organization stocks were boosted after Smith Barney Shearson raised its rating on U.S. Healthcare to “buy.” U.S. Healthcare jumped 2 to 54 3/4, FHP surged 1 1/2 to 23 3/4 and Oxford Health rose 1 1/4 to 41 1/4.

Other Markets

Short-term bond yields tumbled while long-term yields held steady, as last week’s selling wave finally crested--for the time being.

But the market faces a new challenge today, when the government reports October wholesale price inflation. Bond owners want to see a low number, consistent with the idea that economic growth can pick up without boosting inflation.

In the Treasury market, the 30-year bond yield was unchanged from Friday at 6.20%, halting a six-day advance that was driven by signs of faster economic growth.

Shorter-term yields fell. The five-year T-note yield sank to 5.02% from 5.10% on Friday.

Analysts said much of Monday’s rally was tied to the unwinding of speculative trading positions, including “short covering”--purchases of bonds by traders who were closing out prior bets that interest rates would surge.

With today’s inflation report looming, plus this week’s large sale of new Treasury securities, many traders apparently chose to move to the sidelines Monday.

In other markets:

* Near-term gold futures eased $2.30 to $374.80 an ounce on the New York Comex. Silver was off 0.9 cent to $4.49.

* Energy futures ended lower in a selloff led by the gasoline market. Light, sweet crude oil for December fell 38 cents to $16.71 a barrel on the New York Merc.

* The dollar drifted lower as traders took profits from the greenback’s recent advance.

Dow Jones Industrials, Nov. 8, High: 3,674.17; Close: 3,647.90; Low: 3,621.91 New York volume, Nov. 8, 1993: 234.34 million shares