Stocks Mixed as Bond Yield Hits a Low : Market Overview

Stocks finished on a mixed note after computer-driven buy programs erased a 17-point decline in the Dow Jones industrial average. The Dow rose 0.28 point to 3,455.92.

* The yield on the Treasury’s bellwether long bond sank to another record low in light trading marked by sharp price gyrations.

Stocks

Declining issues edged out advancers on the New York Stock Exchange, with 1,018 down, 929 up and 558 unchanged.

Big Board volume totaled 259.5 million shares, up from 257.3 million traded on Wednesday.

Broad market indexes were lower. The NYSE composite index fell 0.34 to 247.39. On the American Stock Exchange, the market value index fell 1.10 to 419.42. The NASDAQ composite lost 3.60 to 670.34.

Although the Dow Jones industrials managed a fractional gain, the outlook for the broader market remains negative, traders and analysts said.

“There’s a dichotomy that’s been going on all week,” said George Pirrone, senior trader at Dreyfus Corp. “The Dow Jones industrials continue to find their way higher, but right below the averages, there’s a significant amount of deterioration. Somewhere along the line, something’s got to give.”

Analysts and traders are becoming increasingly worried that stocks have become too pricey, and that at least a mild correction--to about 3,100 on the Dow--is in the offing.

And talk at the White House of a value-added sales tax could weigh on the economy, which would be bearish for stocks, they said.

Among the trading highlights:

* The prospect of a value-added tax pushed the stocks of retailers lower. J.C. Penney fell 7/8 to 84 5/8. Sears lost 1 1/4 to 52 5/8.

However, Wal-Mart Stores led the most-actives on the NYSE and rose 3/8 to 27 5/8. The stock had fallen Wednesday 1 3/4, or 6%, after the retailer said its 1993 sales growth would be less than analysts had expected.

* Bank stocks fell in reaction to profit taking and to a big drop in State Street Bank Corp. State Street fell 1 1/2 to 33 5/8 in over-the-counter trading after concerns surfaced on Wednesday about rising operating costs.

* One bright spot was paper stocks, which rose after encouraging earnings reports. Georgia-Pacific rose 3 5/8 to 65 3/4, while Weyerhaeuser advanced 1 3/4 to 45 1/2.

* In NASDAQ trading, Microsoft declined 1 7/8 to 87 1/8. On Wednesday, the software company announced earnings that were about on target with analysts’ expectations. But Bear Stearns and Donaldson, Lufkin & Jenrette lowered their earnings estimates.

In overseas trading, London’s Financial Times-100 stock exchange index lost 2.4 points to 2,839.7.

In Frankfurt, the 30-share DAX index finished 2.77 points higher at 1,675.21.

In Tokyo, the 225-share Nikkei average rose 142.46 points to close at 20,675.84.

Credit

The government’s 30-year issue, which rose 7/16 point on Wednesday, was up another 7/16 point, or about $4.38 per $1,000 in face value. Its yield, which moves in the opposite direction, was 6.71%, down from 6.75% late Wednesday.

It was the long bond’s lowest yield since the Treasury began regular auctions of 30-year bonds in 1977.

Participants said the market initially fell in reaction to a government report showing the number of Americans filing first-time claims for jobless benefits fell by 38,000 last week, the biggest drop in more than eight months.

The positive jobs report hurt bonds because it seemed to indicate a rising economy, which can create conditions such as higher inflation that are unfavorable to fixed-income securities.

However, bond prices began climbing as traders decided the figures were an aberration.

The federal funds rate, the interest on overnight loans between banks, was 3.12%, down from 3.25% late Wednesday.

Currency

The dollar moved higher against the German mark but weakened against the Japanese yen, as international developments jerked the greenback but failed to diminish its recent strength.

After two days of losses, the yen flirted with all-time highs against the dollar on renewed speculation that the Japanese government favors a stronger currency to help whittle down the nation’s trade surplus with the United States.

The Japanese yen began its rise overnight in Tokyo on a report in Thursday’s Washington Post that Japanese Prime Minister Kiichi Miyazawa would support a stronger yen in trade talks with President Clinton starting today.

In New York, the dollar was worth 113.10 yen, down from late Wednesday’s 113.88 yen. The British pound settled at $1.5415, less than late Wednesday’s $1.5515. The dollar was worth 1.6055 German marks, up from 1.5935.

Commodities

Precious metal futures prices fell back as a stronger dollar prompted selling that wiped out most of the sharp gains posted a day earlier.

On other commodity markets, copper futures also fell; oil futures retreated; grains and soybeans were mixed, and livestock and meat futures were mixed.

On New York’s Commodity Exchange, gold for April delivery fell $2.50 to $337.20 an ounce; May silver tumbled 6.7 cents to $3.878 an ounce. July platinum fell $1.20 to $368.10 an ounce on the New York Mercantile Exchange.

In energy trading on the Merc, light, sweet crude oil for May delivery fell 18 cents to $20.22 a barrel.

Market Roundup, D6