Dow Edges Up 0.56 to 3rd Straight Record Close

Market Overview * Blue-chip stocks pulled off a late surge Wednesday to eke out a slight gain and close at a third straight record. Smaller stocks posted bigger gains, and London stocks hit new highs.

* A key indicator of commodity inflation hit a three-year high, propelled by higher precious metal prices and rebounding oil prices.

* The dollar surged, especially against the German mark.

Stocks

The Dow Jones industrials ended up 0.56 point to close at a new high of 3,794.33, the third record in a row after Monday’s 35-point rise and Tuesday’s 0.84-point addition.

While the Dow’s rally appeared to be losing steam, however, the broad market was much stronger.

Winners topped losers 12 to 8 on the New York Stock Exchange and 14 to 10 on Nasdaq, and the Nasdaq composite index of mostly smaller stocks jumped 3.92 points to 768.48, the highest close since early December.

The Russell 2,000 index, another proxy for small stocks, advanced 2.27 points to 256.01 and now is a mere 1.7% rise from topping its all-time high of 260.17.

Traders said the Dow’s slowdown appeared to reflect some hesitancy in the market in the face of the psychologically significant 3,800 level. They noted that the blue-chip Standard & Poor’s 500 index inched lower Wednesday from Tuesday’s record close.

Two strong economic reports may have helped smaller stocks: The Commerce Department offered an upbeat economic outlook for 1994, reporting that its index of leading economic indicators rose 0.5% in November.

Also, sales of existing homes rose 2.9% in November from the previous month, according to the National Assn. of Realtors.

NYSE volume topped 269 million shares, but a large chunk of that came from heavy trading in two stocks, which analysts said was due to complex strategies whereby big investors buy the stocks solely to collect current dividends.

SCEcorp, holding company for Southern California Edison, was one of those dividend plays: It eased 1/2 to 21 on extremely heavy volume of 40.8 million shares. SCEcorp goes ex-dividend today.

Also, phone giant Ameritech was unchanged at 79 3/8, on volume of 20.2 million shares. The stock went ex-dividend Monday.

Analysts say such dividend trading plays have little or no effect on a stock’s price trend, despite the heavy volume.

Among the market highlights:

* Many lesser-known industrial issues led the market, benefiting from optimism about the economy. Nucor surged 1 3/8 to 52 7/8, Quanex gained 3/4 to 17 3/8, Kennametal jumped 2 1/4 to 44, Illinois Tool Works added 7/8 to 39 1/2 and Stanley Works was up 3/4 to 43 3/4.

* Telecommunications stocks rebounded, buoying the Nasdaq market. DSC Communications surged 2 to 60 3/4, Newbridge Networks jumped 2 7/8 to 55 1/8, Cencall leaped 3 1/8 to 27 3/4 and Dial Page gained 1 to 39 3/4.

* Bargain hunting was also evident in small tech issues, including Micropolis, up 1/2 to 7 1/8; Optical Radiation, up 5/8 to 15 3/8; Odetics A, up 1/2 to 9 1/4, and Rainbow Technologies, up 1 to 19 1/2.

* Among other tech issues, Intel lost 7/8 to 63 1/8 and Advanced Micro Devices eased 3/8 to 17 3/4 after a federal court advanced Intel’s lawsuit that charges AMD with illegal copying of computer chips.

* On the downside, UAL, parent of United Airlines, sank 2 1/8 to 146 after Merrill Lynch downgraded the stock. Other airlines were also weak. Delta lost 1 to 54 5/8 after Prudential Securities cut its fiscal 1994 earnings estimate to break-even from $1.45 a share.

* Several single-country stock funds plunged, after recent steep run-ups. India Growth Fund tumbled 1 3/4 to 28 1/8, Korea Fund lost 3 1/4 to 22 5/8 and Chile Fund fell 2 1/2 to 43 7/8.

Nonetheless, many foreign stock markets hit record highs as the year drew to a close. The list of new highs included Manila, Singapore, Bangkok and Karachi.

London shares also hit a record as the FTSE-100 index rocketed 49.7 points to 3,462.0.

In Mexico City, the Bolsa surged 25.25 points to a record 2,599.91.

In Tokyo, stocks ended higher Wednesday as the Nikkei 225-share index added 140.82 points to 17,272.03. And today, the Nikkei closed the final, abbreviated trading session of 1993 with a 145.21-point rise to 17,417.24. For the year, the Nikkei was up 2.9%.

Other Markets

The Commodity Research Bureau’s index of 21 futures, a closely watched inflation barometer, gained 1.18 points to a new three-year high of 226.56.

Strong copper, cotton and lumber prices contributed to the jump in the index, which could reflect a pickup in demand and prices in the economy. “The strength in the industrial commodities would imply an increase in economic demand, which in turn could create inflationary pressures,” said Rusty Vanneman, market analyst with Pegasus Econometrics.

Hans Kashyap, head of Analytics Research, said the CRB index got a big boost from oil, which rose off recent five-year lows. Crude for February rose 33 cents to $14.44 a barrel on the New York Merc.

On the New York Comex, near-term gold closed at $390.70 an ounce, up $3.10 from Tuesday. Silver rose 3.5 cents to $5.11.

Elsewhere, the dollar rose smartly against the German mark and other European currencies after a burst of dollar buying in Europe. In New York, the dollar finished at 1.727 German marks, up from 1.699 on Tuesday, and at 111.78 yen, up from 111.38.

Long-term bond yields edged up in lackluster trading. The Treasury’s main 30-year bond yield rose to 6.24% from 6.23% on Tuesday.

Market Roundup, D6