Stocks Avert New Plunge; Dow Finishes Down 1.89 : Market Overview

Highlights of Wednesday’s market activity, as compiled from Times staff and wire reports:

* The stock market closed out a session of erratic swings with only small changes. The Dow Jones industrial average finished the day down 1.89 points at 3,293.28.

* The bond rally finally stalled as interest rates inched up slightly. Elsewhere, silver stabilized after Tuesday’s deep plunge.

Stocks

The market continued to focus on upcoming earnings reports, and negative sentiment remained heavy after Tuesday’s 44-point Dow slump.

The latest victims of earnings worries were California banks, which dropped as investors feared the weak Golden State economy will mean surprisingly bad second-quarter results.

But a few positive earnings surprises, such as shoe maker Nike’s report, helped calm some investors’ jitters. The Dow, off nearly 20 points late in the day, recovered quickly by the close. Most major stock indexes finished higher.

Still, declining issues outnumbered advances by about 9 to 8 on the New York Stock Exchange. Volume was 201.03 million shares versus Tuesday’s 226.05 million.

Some analysts say the market is due for a bounce up, after dramatic selling of many stocks in recent weeks. “I think we could see the market back up to the 3,300 level,� said Robert Walberg, an analyst at MMS International. “I think it’s looking pretty good for the next few days.�

But he conceded that earnings, the election and the stagnant economy all are lingering impediments.

Among the market highlights:

* The Dow was helped by strength in IBM, up 1 1/8 to 97 7/8; Philip Morris, up 3/4 to 78 3/8; Alcoa, up 7/8 to 72 1/2, and Eastman Kodak, up 1 1/4 to 41 1/4.

* The embattled technology group snapped back, helped by computer-parts maker Exabyte’s report that second-quarter earnings were 54 cents a share, up from 30 cents a year ago. Exabyte shares jumped 2 3/4 to 29 3/8.

Other tech gainers included Apple, up 1 1/2 to 45 3/4; Autodesk, up 2 1/4 to 37 1/4; Hewlett-Packard, up 1 1/4 to 65 1/8, and Conner Peripherals, up 7/8 to 17 7/8.

* Health care stocks continued to see fresh demand. Johnson & Johnson rose 1 to 47 1/4, Merck added 5/8 to 50 7/8, National Medical Enterprises was up 1 to 15 1/4, and Salick Health gained 3/8 to 10 5/8.

* Nike shares leaped 6 3/8 to 66 1/8 after it reported quarterly earnings of 92 cents a share, up 21% from a year ago. The firm forecast a “record year� in fiscal 1993, which began June 1. In contrast, rival L.A. Gear tumbled 1 5/8 to 10 5/8 after reporting a quarterly loss.

* Utility stocks, the market’s stars lately, rose further as investors sought “safe haven� issues in a weak economy. SCEcorp, parent of Southern California Edison, added 3/8 to 45 1/4, Texas Utilities gained 1/2 to 40 5/8, and Pacific Telesis was up 1 to 41 3/4.

* On the downside, California banks fell on worries about the sinking state economy. BankAmerica dropped 1 1/4 to 42 1/2, Wells Fargo gave up 1 1/4 to 72 3/8, and First Interstate lost 1/2 to 41.

* Airline and other transportation stocks also were among the day’s losers, on renewed concerns about profits. Among airlines, AMR, parent of American Air, sank 2 1/8 to 63 5/8, Delta fell 1 5/8 to 55 1/8, and Southwest Air gave up 1 3/8 to 42 3/4.

Among truckers and railroads, Roadway Services fell 3 3/4 to 62, Burlington Northern dropped 1 1/8 to 36, and Union Pacific lost 1/2 to 48 1/2.

* Loral rose 1/2 to 32 7/8. The defense electronics firm said a 2-million-share repurchase program would add about 10 cents to its annual earnings per share.

In foreign markets, Mexican stocks ended lower again, with the Bolsa index falling 31.86 points to 1,582.33, though in quiet trading. Cemex shares continued to slide on worries about its planned acquisition of Spain’s biggest cement company, Valenciana.

Share prices on the London stock exchange closed lower, with the Financial Times 100-share average dropping 21.1 points to 2,472.6.

In Frankfurt, the DAX average sank 16.33 points to 1,751.18, its lowest close since May 15.

Tokyo managed a gain, as the Nikkei average rose 140.71 points to 16,600.26.

Credit

Interest rates closed mostly higher as investors took profits from the recent bond rally sparked by the Federal Reserve’s latest interest-rate cut.

The price of the Treasury’s 30-year bond was down 1/32 point, or 31 cents per $1,000. Its yield was unchanged from Tuesday’s 7.60%, while yields on most shorter-term Treasury bonds inched up.

Bond yields had steadily fallen since last Thursday, when the Fed cut two key interest rates after the June employment report showed a stunningly weak economy.

But an auction of seven-year Treasury notes on Wednesday gave investors an excuse to take profits. Though the auction went well--the average yield on the notes was 6.44%, lowest since January--investors sold other bonds into the market strength.

The federal funds rate, the rate on overnight loans between banks, rose to 6.00% from 2.75% Tuesday. The rate often fluctuates wildly on Wednesdays for technical reasons.

Currency

The dollar was mixed in subdued trading, a sharp change from Tuesday’s hectic dealings that saw the currency plunge.

Traders said the dollar rose early in the day after comments from Treasury Secretary Nicholas F. Brady. Speaking in Munich at the gathering of the world’s leading industrial nations, Brady said the United States isn’t “seeking to depreciate the dollar.�

That prompted some traders to buy dollars to cover short positions, or bets that the currency’s value would decline further.

In New York, the dollar closed at 1.489 German marks versus Tuesday’s 1.490. But the dollar rose to 124.70 Japanese yen, up from 124.10.

Commodities

Silver and gold futures settled higher on New York’s Comex. September silver futures added 1 cent to $3.91, following Tuesday’s 15.8-cent plunge that was sparked by alleged dumping of silver by a major Saudi bank.

August gold contracts gained $1.30 to $348.40 an ounce.

Cocoa futures registered big gains on New York’s Coffee, Sugar & Cocoa Exchange on technical buying and concerns about dry weather in cocoa-producing regions of West Africa.

Cocoa for September settled $55 higher at $1,036 per metric ton.

In the oil market, August contracts for light, sweet crude settled at $21.41 a barrel, up 1 cent on the New York Merc.