Dow Gains 8.64 on Profit Taking : Market Overview

Stock ended higher as nervous investors bought up perceived bargains but also took profits in stocks that had gained in previous days.

* Long-term Treasury bond yields fell in early trading but reversed later in the day to close unchanged.

Stocks

Investors capitalized on stocks that had risen with a 33-point run-up on the Dow on Wednesday. But they were just as anxious to find bargains to put their ample cash supplies to work.

Cash has been flowing into stock funds from investors disappointed at the recent drop in bond yields.

The Dow Jones industrial average closed up 8.64 points to 3,365.14 on Big Board volume of 260.05 million shares, down sharply from Wednesday’s 316.75 million. In the broader market, advancing issues outnumbered decliners by about 4 to 3 on the New York Stock Exchange.

The NASDAQ index rose 4.61 to end at 667.07 after gains in technology stocks offset a steep selloff in biotechnology stock Amgen Inc.

The Dow index fell early in the day as low as about 3,343, or down about 13 points.

“Money continues to move around very quickly and viciously,” said Elliot Spar, an options trader at Gruntal & Co. But Spar said the ample cash on the sidelines was evidence of an “underlying resiliency” in the market.

Analysts also said blue chip stocks were trying to recover from a bout of selling that broke out after the Dow index hit a record high on Feb. 5. But worries over the economic package and some disappointing company news were slowing the rebound.

Clinton’s economic plan picked up strong endorsements Thursday from leaders of business and labor unions.

The President addressed two dozen business executives and labor officials, promoting his proposals to cut the federal deficit by $325 billion over four years through spending cuts and tax hikes, combined with a fiscal stimulus package.

But leading Republicans stepped up attacks on what they have termed his “tax and spend” proposal, announcing a coalition of 100 organizations united to defeat the plan.

Among the market highlights:

Airline stocks recovered sharply, despite being forced by a Justice Department lawsuit to curtail information about air fares. But airline stocks had taken a beating in the last several sessions in response to President Clinton’s plan to raise energy taxes.

* On Thursday, AMR Corp. was up 3 1/2 to 60 7/8; Delta Air Lines up 2 1/4 to 50 3/8, and UAL Corp. up 5 1/4 to 119 1/4.

The rise in airline stocks helped push the Dow Jones transportation index sharply higher by 25.99 points, or 1.73%, to 1,532.20.

Aerospace stocks also rose smartly after top-level executives made presentations at an industry conference. General Dynamics rose 3 3/4 to 117 5/8; Grumman added 1 3/8 to 31 1/8; Lockheed advanced 1 3/4 to 58 3/4, and McDonnell Douglas gained 2 5/8 to 53 1/2.

* Biotechnology stocks fell, led by Amgen, which dropped 9 1/4 to 37. Amgen said late Wednesday that its first-quarter earnings would be 10% to 15% below analysts’ previous expectations.

* Chiron fell 1/2 to 48 3/4 in sympathy, but Biogen, another biotech company, recovered earlier losses and ended 1 1/4 higher at 29 1/4.

* Chrysler led the most-active names on the NYSE and rose 3/8 to 38 7/8. Philip Morris was second, down 1/4 at 66. Like all cigarette companies, Philip Morris has been dogged by reports that President Clinton will raise cigarette taxes to pay for his health plan.

* Computer stocks profited from investors’ continued interest in Clinton’s support for technology development. IBM rose 2 to 53 3/4 in active trading, and Compaq rose 2 to 46 7/8.

* Digital Equipment rose 1 1/4 to 48 1/8. The Maynard, Mass., computer maker said it will close a plant in Galway, Ireland, affecting an estimated 780 employees.

* Eastman Kodak finished up 2 3/4 at 53 1/8 in heavy trading. The company’s chief financial officer told Dow Jones News Service that he is willing to sell assets to cut the company’s debt-to-equity ratio.

In overseas trading, shares rebounded in Frankfurt. The DAX 30-share average closed 14.67 points up at 1,658.91. On the London stock exchange, the Financial Times 100-share average gained 11.7 points to finish at 2,828.7. In Tokyo, the 225-share Nikkei average ended the day 108.45 points higher at 16,907.39.

Credit

Thirty-year bond yields closed unchanged at 6.88% after a volatile trading session. Its price fell 1/16 point, or 63 cents per $1,000 in face amount.

The bond’s yield, a key indicator of long-term interest rates, has edged up from historic lows in the last two days. Late Tuesday, the yield was 6.82%.

Prices retreated late in the day on speculative selling, according to Tom Lanier, a trader for Chemical Bank.

“The market was all over the map,” said Michael Moran, chief economist for Daiwa Securities America Inc. In the absence of any significant economic news, he said, “this type of erratic movement indicates that the market is groping for direction.”

Moran and other analysts said, however, that they did not expect a repeat of the rallies earlier in the week that sent yields plunging across the board.

“The downward movement in interest rates is beginning to cool off,” Moran said.

The federal funds rate, the interest on overnight loans between banks, was 3.125%, up from 2% late Wednesday.

Other Markets

The dollar finished mixed against major foreign currencies while the market waited to know what the economy’s true strength is and what the Group of Seven industrial nations might decide this weekend.

Andrew Busch, a vice president in charge of foreign exchange at Harris Trust & Savings Bank in Chicago, said the dollar had been fairly range-bound before it moved upward on the German mark at the end of the day.

Traders betting the dollar would decline indulged in some short-selling in anticipation of revised fourth-quarter gross domestic product numbers due today and what would come out of the G7 meeting this weekend, Busch said.

In New York, the dollar was quoted at 1.635 German marks, up from Wednesday’s close of 1.627 marks. It also settled at 117.475 Japanese yen, unchanged from late Wednesday.

The British pound was quoted at $1.432, more expensive than $1.431 late Wednesday.

Elsewhere, light, sweet crude oil rose 8 cents to $20.61 a barrel on the New York Mercantile Exchange.

In precious metal trading on New York’s Commodity Exchange, gold rose 20 cents to $329.90 an ounce, and silver fell 2.1 cents to $353.90 an ounce.

Market Roundup, D6