Stocks Climb in Brisk Buying; Dow Up 18.30

Market Overview

* Stocks streaked to new highs Thursday, as fear of rising interest rates receded and investors focused on the outlook for improving corporate profits.

* Long-term Treasury bond yields dropped sharply, even after positive economic news that ordinarily would tend to boost interest rates. Gold prices plunged.

Stocks

The Dow industrials jumped 18.30 points to a new high of 3,926.30 as computerized program buying intensified an early rally.

New government reports of solid economic growth--in particular, word of a surge in orders for durable goods in December--provided a positive backdrop to the session.

Also, strength in the bond market, combined with a sudden rally in recently depressed utility stocks, helped put investors in a buying mood.

Among broader market indexes, the New York Stock Exchange composite index rose 2.12 points to a record 264.38, exceeding its previous high of 263.20 set Jan. 20. And the Standard & Poor’s 500 stock index jumped 3.85 points to a record 477.05, topping the previous record of 475.27 set Jan. 10.

On the NYSE, advancing issues outnumbered declining ones by about 5 to 3 as volume ballooned to 346.50 million shares.

Analysts said an unusually strong rebound in utility stocks indicated that investors may be losing their fears that interest rates will head significantly higher in the near future. The Dow utility index leaped 4.15 points, or 1.9%, to 225.61. The index had fallen to a 52-week low earlier this week.

“I think the market reflects renewed optimism about the outlook for interest rates,” said Michael Metz, analyst at Oppenheimer & Co. in New York.

Among the market highlights:

* The Dow was boosted by AlliedSignal, up 7/8 to 78; Dupont, up 1 to 55 1/8; GE, up 1 3/4 to 108 1/4, and Caterpillar, up 2 1/4 to 101 1/2.

Gains in those stocks helped offset a drop of 3 3/4 to 107 1/4 in shares of 3M, after it reported lower than expected quarterly earnings.

* Also helping the Dow: AT&T; posted fourth-quarter earnings in line with Wall Street expectations, and the stock rose 3/4 to 56 3/4.

* The rally in auto stocks revived. Ford rose 1 7/8 to 66 3/4, Chrysler gained 7/8 to 60 1/2 and GM added 1 1/4 to 59 7/8.

* Electric utility stocks rebounding sharply included American Electric Power, up 5/8 to 36 1/2; Houston Industries, up 1 1/8 to 45 3/8, and SCEcorp, up 1/2 to 19 5/8.

Phone stocks also surged. Southwestern Bell jumped 1 5/8 to 41, BellSouth gained 1 7/8 to 60 and Nynex added 1 to 41.

* Among classic growth stocks, Callaway Golf soared 4 1/8 to 62 5/8 after reporting sharply higher quarterly earnings. Also, drug maker Schering-Plough added 3/4 to 64 3/8 on its earnings report.

* Among the day’s losers, Sara Lee slumped 1 1/2 to 23 1/2. It reported improved second-quarter earnings but said third-quarter results might fall short of expectations.

* Gold stocks tumbled as bullion prices fell. ASA dropped 2 1/8 to 51 3/8, American Barrick slid 7/8 to 27 3/8 and Placer Dome plummeted 1 5/8 to 24 3/4.

In foreign markets, Mexico City’s Bolsa index ended at a record 2,712.91, up 53.62 points. Telmex’s NYSE shares gained 2 1/2 to 71 3/8.

In Tokyo, stocks ended a day of seesaw trading lower, with the Nikkei average off 246.42 points at 18,891.79. In London, the FTSE-100 index eased 8.8 points to 3,427.3; Frankfurt’s DAX average added 5.97 points to 2,125.14.

Credit

In the bond market, traders and investors apparently focused on plummeting gold prices, which allayed some concerns that inflation was likely to rise from last year’s low levels.

The main 30-year bond yield fell to 6.26% from 6.30% the day before, pushing prices up 5/8 point, or $6.25 per $1,000 in face value.

Prices of shorter-term maturities posted smaller gains. Short-term Treasury securities rose 1/16 point and intermediate maturities rose 1/8 point to 5/16 point, the Telerate Inc. financial information service reported.

Most of the gains came in an afternoon rally, hours after the Commerce Department reported that orders to factories for durable goods jumped 8.6% in 1993--the biggest advance in five years.

But the market largely ignored the report, which was viewed as old news by many participants, analysts said.

Also largely brushed off was a Labor Department report that the number of initial applications for unemployment benefits declined by 56,000 last week. Much of that was considered an aberration due to the effects of frigid weather, a federal holiday and the Northridge earthquake.

Instead, many participants focused on the plunging price of gold. The metal is used by many investors as a hedge against inflation.

Other Markets

Gold futures prices tumbled to an eight-week low as weakening inflation signals prompted investors to shift funds from precious metals into stocks.

Gold plunged $7.20 on New York’s Comex to $377.40 an ounce, the lowest daily settlement since Dec. 2. Silver skidded 15.6 cents to $4.967 an ounce, a seven-week low.

Elsewhere, light, sweet crude oil for March delivery slipped 5 cents on the New York Merc to $15.42 a barrel as traders took profits from Wednesday’s gains.

Meanwhile, the dollar fell to its lowest closing level against the Japanese yen in seven weeks.

In New York, the dollar closed down at 108.55 Japanese yen.

Market Roundup, D6