Dow Industrials Gain Back 14.05 : Market Overview

Blue chip stocks closed higher, buoyed by bargain-hunting after four straight losing sessions. The Dow Jones industrial average, down 47.01 points over the previous four sessions, climbed 14.05 points to 3,207.37.

* Treasury bond yields finished lower after the Federal Reserve executed a long-awaited purchase of Treasury securities. The yield on the 30-year bond was 7.50%, down from 7.53% late Tuesday.

Stocks

Secondary stocks shot higher, helped by large gains in technology and medical-related shares. The NASDAQ index issues rose 7.80 points to end at 634.87.

Advancing issues outnumbered declines by more than 9 to 5 on the New York Stock Exchange. Big Board volume rose to 219.08 million shares from Tuesday’s 187.66 million

Also helping the blue chips was a solid rally in transportation issues. The Dow Jones transportation index rose 13.90 points to 1,355.13.

“Today we’ve resumed the trend of the troops leading the generals as the OTC stocks continue to outperform the Dow Jones industrial average,” said Tony Dwyer at Prudential Securities.

“I think Hewlett-Packard was probably one of the triggers,” said David Shulman, equity strategist at Salomon Bros. Although the computer company posted sharply lower earnings, orders were strong, he said.

Hewlett-Packard stock jumped 3 1/2 to 58 7/8.

Richard Meyer, managing director of institutional trading at Ladenburg Thalmann, said, “Some of the tech stocks which were down yesterday were doing a bit better today.”

Among the market highlights:

* Costco Wholesale lost 7/8 to 25. Alex. Brown cut its rating to a buy from a strong buy.

* Moorco International tumbled 6 1/8 to 16 7/8 after the manufacturer said it expects lower quarterly earnings.

* International Business Machines lost 1 3/8 at 62 7/8 in what some traders called the “changing of the guard” between Apple Computer and IBM. Apple Computer, which authorized a 10-million-share buyback, rose 2 1/2 to 57 3/4.

* In the technology group, Microsoft rose 2 to 92, Seagate Technology was up 7/8 to 18 5/8, Borland International gained 1/4 to 25, and Intel rose 1 3/4 to 69 1/2.

* Biotech and medical gainers included Tokos Medical, up 1 3/8 to 17 1/2; Chiron, up 3 5/8 to 57 1/4, and Amgen, up 2 to 74 3/4.

Overseas, stocks rose on the London stock exchange in a volatile session with solid gains in line with a sharp rise in stock index futures, pushing the Financial Times 100-share average up 24.8 points to 2,704.0.

The Frankfurt market was closed for the prayer and repentance day holiday.

Credit

Treasury bond prices rose after the Federal Reserve executed a long-awaited purchase of Treasury securities.

The price of the main 30-year bond, which rises when yields decline, was up 13/32 point, or $4.06 per $1,000 in face amount.

The Fed announced at mid-afternoon that it would do a “coupon pass,” or purchases on the open market, to counter a seasonal shortage in the Fed’s own supplies of Treasury securities. The purchase would be of securities maturing after June, 1993.

“The coupon pass technically has helped things out,” said Jan Hurley, senior market analyst at Chase Securities Inc.

Hurley said the coupon pass had “just sort of slapped people across the face and said, ‘Hey, things aren’t as bad as they seem.’ ”

The federal funds rate, the interest on overnight loans between banks, fell to 2.75% down from 3.00% late Tuesday.

Currency

The dollar finished lower against most major currencies despite a report that the U.S. trade deficit shrank in September.

The dollar was mixed when foreign exchange trading wound down in Europe, but lost ground toward the end of domestic dealings.

“We are seeing a late selloff here,” said Alan Jirkovsky, managing director of foreign exchange at Continental Bank in Chicago. He attributed the late move to internal conditions in the currency market.

He said the report that the U.S. trade deficit fell to $8.31 billion in September from $8.95 billion in August normally would have helped the dollar, particularly since it reflected an unexpected 6.8% rise in exports.

That’s usually good news for the dollar because an increase in demand for U.S.-made goods would mean more dollars would be required to make the purchases.

In New York, the dollar closed to 123.70 Japanese yen and 1.590 German marks, down from Tuesday’s 124.35 yen and 1.592 marks.

Commodities

Oil futures continued a downward drift after an industry trade group reported that crude oil supplies had dropped.

Light, sweet crude oil for delivery in December settled at $20.19 per barrel, down 7 cents, on the New York Mercantile Exchange. Most other energy futures also fell.

On other commodity markets, lumber futures rose sharply; grains and soybeans were mostly lower; precious metals rose; livestock futures were mostly higher, and pork bellies retreated.

Precious metals edged higher on New York’s Commodity Exchange, with gold rising 80 cents to close at $335.10 an ounce, while silver rose 0.5 cent to $3.763 an ounce.

Market Roundup, D6