Stock and bond markets muddled through a relatively dull session Thursday, awaiting today's February employment report and more clues to the economy's trend.
Bond yields settled mostly unchanged after an early rise, and in the stock market winners and losers were nearly evenly matched.
The Dow Jones industrial average, modestly in negative territory for most of the day, ended with a 11.92-point gain to 5,641.69 as buyers emerged in the final minutes--the typical pattern of 1996.
Most broad market indexes also closed up slightly.
"We had some last-minute buying in blue chips, but overall the market was pretty featureless," said Marty Kearney, trader at PTI Securities. "People are waiting for the February jobs report."
That report may go a long way toward determining whether the Federal Reserve Board cuts short-term interest rates again when it meets March 26.
Economists polled by Reuters forecast on average a 326,000 increase in nonfarm payrolls for February, a rebound from the steep 201,000 decline in January that was attributed to severe winter weather in parts of the country.
Economists noted that, barring any major revisions to January data, 300,000 or so additional jobs in February would average out to an increase of only 50,000 a month so far this year--a weak showing that could persuade the Fed to ease credit further.
But on Thursday, the Labor Department said the number of Americans who applied for first-time unemployment benefits rose just 6,000 last week to 363,000.
The increase was less than economists were anticipating, and could have been a prelude to a stronger-than-expected February employment report today.
Signs of economic strength have spooked the bond market in recent weeks, driving longer-term yields to nearly five-month highs. On Thursday, the 30-year Treasury bond yield rose as high as 6.49% but closed at 6.46%, the same as Wednesday.
Despite the rise in yields so far in 1996, the stock market has consistently shaken off interest rate worries to reach record highs.
The market has partly been supported by a continuing corporate merger wave, and it got more news on that front Thursday, with word of a $27-billion combination between global drug giants Sandoz and Ciba-Geigy.
Among Thursday's highlights:
* Drug stocks surged on news of the Ciba-Sandoz deal, as investors bet on more consolidation in the industry. American Home Products leaped 1 3/4 to 104 1/2, Johnson & Johnson surged 2 3/8 to 98 1/4, Warner-Lambert jumped 2 1/4 to 106 3/4 and Schering-Plough gained 1 1/2 to 61 3/8.
* Also in the health-care field, Manor Care surged 3 to 42 after saying it will split into two, keeping its nursing home business while spinning off its hotels.
* Beaten-down paper company stocks jumped after brokerage PaineWebber said demand for certain grades of paper, in a decline since autumn, is picking up again.
International Paper leaped 1 3/8 to 38 1/8, Boise Cascade surged 2 1/4 to 38 3/4 and Champion International gained 2 1/2 to 44 1/8.
* Retail stocks were mostly lower despite news of strong February sales at many companies. The stocks had surged in recent weeks in anticipation of better sales. Sears lost 1/8 to 47 3/4, Dayton Hudson slid 1 7/8 to 79 5/8, J.C. Penney sank 1 1/8 to 49 3/4, Dillard dropped 1 3/8 to 33 5/8 and Ann Taylor was off 3/4 to 16 7/8.
But some clothing makers gained, including Mossimo, up 1 7/8 to 28 3/4, and Tommy Hilfiger, up 2 to 43 7/8.
* Acme-Cleveland rocketed 10 1/8 to 30 1/8 after the telecommunications products maker got an unsolicited $27-a-share takeover offer from Danaher. Acme-Cleveland said it would review the offer.
* Among Southland issues, Vans surged 1 5/8 to 14 1/4 on expectations of strong sales from its expanding snowboard-boot business, analysts said.
Also, Torrance-based Helisys went public, selling 1.2 million shares at 5 1/2 apiece. The stock rose to close at 6 7/8 on Nasdaq. The company makes machines that produce prototypes for industrial parts and other products.
In foreign trading, South Korean stocks were broadly lower, with the Seoul composite index off 1% to 842.22, a 27-month low. Analysts cited earnings worries.
In Tokyo, the Nikkei-225 index sank 284.03 points to 19,957.15, lowest since Feb. 28, on concerns about technology companies' earnings. Hong Kong's Hang Seng index slid 1.6% as bond yields jumped.